##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
     Form 10-K
   þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal years ended
    December 31, 2006o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File
    No. 001-32365
  FELDMAN MALL PROPERTIES,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Maryland(State or other
    jurisdiction
    incorporation or organization)

13-4284187(I.R.S. Employer
    of
    Identification No.)   1010
    Northern Boulevard, Suite 314, Great Neck, NY 11021 (Address
    of principal executive offices  zip
    code)
  (516) 684-1239
 Registrants telephone number, including area code
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.01 par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
    None
  o þ
  o þ
  o þ
  Form 10-K Form 10-K.  Yes þ o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
    DOCUMENTS INCORPORATED BY REFERENCE




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##### 



FELDMAN
    MALL PROPERTIES, INC.
  FORM 10-K
  TABLE OF
    CONTENTS
  10-K
    andItem No.



PagePART I1.


Business


41A.


Risk
    Factors


131B.


Unresolved Staff
    Comments


262.


Properties


273.


Legal
    Proceedings


504.


Submission of
    Matters to a Vote of Security Holders


50PART II5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


516.


Selected Financial
    Data


527.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


537A.


Quantitative and
    Qualitative Disclosures about Market Risk


698.


Financial
    Statements and Supplemental Data


709.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


1199A.


Controls and
    Procedures


1199B.


Other
    Information


122PART III10.


Directors,
    Executive Officers and Corporate Governance


12211.


Executive
    Compensation


12212.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


12213.


Certain
    Relationships, Related Transactions and Director
    Independence


12214.


Principal
    Accountant Fees and Services


122PART IV15.


Exhibits and
    Financial Statements Schedules


12316.


Signatures


12717.


CertificationsEX-21.1EX-31.1EX-31.2EX-32   2




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##### Table of Contents



STATEMENTS
    REGARDING FORWARD-LOOKING INFORMATION
  Form 10-K,
  
    our business strategy, including our renovation and
    repositioning plans;
    our ability to obtain future financial arrangements;
    estimates relating to our future distribution;
    our understanding of our competition;
    market trends;
    projected capital expenditures;
    demand for shop space or retail goods;
    our ability to close future acquisitions;
    availability and creditworthiness of current and prospective
    tenants; and
    lease rates and terms.    Form 10-K
 3




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  General
        Form 10-K
  Corporate
    Structure
  IPO
    and Formation Transactions
        
    Pursuant to separate contribution, merger and related
    agreements, the contributors contributed their direct and
    indirect ownership interests in the contributed entities to us
    in exchange for an aggregate of 123,228 shares of our
    common stock and 1,593,464 OP units. In addition, unaffiliated
    third party investors exchanged their ownership interests in two
    of our joint ventures for $5.0 million in cash. 4




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##### Table of Contents




    The contribution, merger and related agreements provide that
    Larry Feldman, our Chairman and Chief Executive Officer, Jim
    Bourg, our Chief Operating Officer and one of our directors, and
    Scott Jensen, our Senior Vice President of Leasing, retained all
    right, title and interest held by the contributed entities to
    amounts held in certain cash impound accounts established
    pursuant to the prior $54.8 million mortgage loan that was
    due in 2008 that was secured by the Foothills Mall. As of the
    Offering Date of the Companys IPO, the balance in these
    accounts totaled $7.6 million. As of December 31,
    2005, these impound accounts had been released to the Company by
    the lender of Foothills Mall and distributed to
    Messrs. Feldman, Bourg and Jensen.
    The contribution, merger and related agreements further provide
    that Feldman Partners, LLC (an entity controlled by Larry
    Feldman and owned by him and his family), Jim Bourg and Scott
    Jensen will receive additional OP units relating to the
    performance of the joint venture that owns the Harrisburg Mall.
    The aggregate value of the additional OP units that may be
    issued with respect to the Harrisburg Mall is equal to 50% of
    the amount, if any, that the internal rate of return achieved by
    us from the joint venture exceeds 15% on our investment on or
    prior to December 31, 2009. The fair value of the right to
    receive these additional OP Units was approximately
    $5.0 million at the Offering Date.
    We became subject to approximately $74.2 million of
    consolidated mortgage and other indebtedness consisting of
    (i) a $54.8 million mortgage loan secured by the
    Foothills Mall, (ii) a $5.5 million mezzanine loan
    relating to the Foothills Mall, (iii) a $5.9 million
    intercompany loan owed to Feldman Partners, LLC that was used to
    invest in the Harrisburg Mall and the Foothills Mall and to pay
    our predecessors overhead expenses,
    (iv) $4.0 million outstanding under a line of credit
    owed by our predecessor which was incurred to return funds
    advanced by the contributors in connection with the purchase and
    renovation of the Harrisburg Mall and the Foothills Mall, and
    (v) a $4.0 million distribution owed by our
    predecessor to Messrs. Larry Feldman, James Bourg and Scott
    Jensen. In addition, the joint venture that owns the Harrisburg
    Mall remained subject to a construction loan of which the joint
    venture had borrowed approximately $44.3 million at the
    Offering Date.
    We applied approximately $17.5 million of the net proceeds
    from our initial public offering to repay certain of our
    predecessors outstanding indebtedness, including
    (i) the $5.5 million mezzanine loan relating to the
    Foothills Mall, (ii) $4.0 million of the
    $5.9 million intercompany loan owed to Feldman Partners,
    LLC ($1.9 million of this loan was converted into equity
    securities), (iii) a $4.0 million distribution owed by
    our predecessor to Messrs. Larry Feldman, James Bourg and
    Scott Jensen, and (iv) the $4.0 million outstanding
    under our predecessors line of credit. 5




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##### Table of Contents



Our
    Industry
    Types of
    Retail Properties
  Square FeetType of Center

Concept/Market

(Including Anchors)

Anchor TypeNeighborhood Center

Convenience

30,000 - 150,000

One or more supermarketsCommunity Center

General merchandise, convenience

100,000 - 350,000

Two or more discount department
    stores, supermarkets, drug stores, home improvement or large
    specialty/discount apparelRegional Malls*

General merchandise, fashion
    (typically enclosed and referred to as malls)

400,000 - 800,000

Two or more full-line
    department stores, jr. department stores, mass merchant,
    discount department stores or fashion apparelSuper-Regional Malls*

Similar to regional mall but
    has more variety and assortment (typically enclosed and referred
    to as malls)

800,000+

Three or more full-line
    department stores, jr. department stores, mass merchant or
    fashion apparelFashion/Specialty Center

Higher-end, fashion-oriented

80,000 - 250,000

FashionLifestyle Center

Upscale specialty stores; dining
    and entertainment in outdoor setting

150,000 -500,000
    (can be smaller or larger)

Not usually anchored but may
    include large-format book store, multiplex cinema, small
    department stores and other big boxesPower Center

Category-dominant anchors, few
    small tenants

250,000 - 600,000

Three or more category killer,
    home improvement, discount department stores, warehouse club or
    off-price storesTheme/Festival Center

Leisure, tourist-oriented, retail
    and service

80,000 - 250,000

Restaurants, entertainmentOutlet Center

Manufacturers outlet stores

50,000 - 400,000

Manufacturers outlet stores     *
    
    Target properties   Malls
   6




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Investment
    Classes
    Classes
    of Malls
  Shop TenantClass

Sales Per Square FootClass A

Above $
350Class B

$
250 - $350Class C

Below $
250     The
    Market Opportunity
     7




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##### Table of Contents




    the large number of existing malls which adequately serve or, in
    many cases, over-serve the available mall trade areas in the
    United States;
    the presence of large stand-alone discount retailers such as
    Wal-Mart and Target;
    the costs and difficulties associated with acquiring land for
    sites with sufficient acreage, requisite regional access and
    suitable development characteristics;
    the time and expense associated with obtaining zoning
    entitlements and environmental approvals due to growing
    environmental concerns and objections to new mall development
    from local governments and citizen groups; and
    the high costs of new construction and a five to
    10-year lead
    time required from project conception to completion of new malls.  and/or and/or
  Our
    Business and Growth Strategies
    
    Pursue Joint Ventures.  We intend to acquire,
    renovate and reposition some of our properties in joint ventures
    with institutional investors. Through these joint ventures, we
    will seek to enhance our returns by supplementing the cash flow
    we receive from our properties with additional management,
    leasing, development and incentive fees from the joint ventures.
    In addition, we will periodically sell partial equity interests
    in our more stabilized assets through joint venture partnerships
    with institutional investors.
    Implement Renovation and Repositioning
    Strategies.  We intend to implement comprehensive
    renovation and repositioning strategies aimed at improving the
    physical appearance, visibility and design of our malls in order
    to increase shopper traffic and tenant sales.
    Maximize Occupancy.  We will seek to remedy
    weak occupancy levels at our properties under redevelopment by
    adding anchor tenants with powerful consumer draws as well as
    attractive and diverse national and specialty shop tenants. We
    expect to achieve preferable tenant mixes by moving tenants into
    tenant neighborhoods. Tenant neighborhoods are
    clusters of tenants located within a concentrated area of a mall
    that sell to specific consumer segments, such as teenagers. A
    major component of our tenant leasing program will include
    implementing targeted tenant marketing campaigns at the local
    and national levels.
    Drive Revenues Through Leasing.  We will seek
    to increase rental income from existing space by maintaining
    high levels of occupancy, increasing rental rates as current
    leases with below market rents expire, negotiating new leases to
    reflect increases in rental rates and maximizing percentage
    rents. We will also seek to replace underperforming shop tenants
    with stronger tenants whose sales will enhance overall mall
    traffic and tenant sales. Following the completion of the
    renovation and repositioning of our malls, we expect our
    tenants sales per square foot to increase. We expect that
    such increases in sales per square foot will enable our tenants
    to pay higher rents. We also believe that higher tenant sales
    per square foot will 8




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generate increased leasing demand from higher quality shop
    tenants. As a result, we believe that our malls will tend to
    have a greater potential for increases in rent upon lease
    renewal in comparison to more stable properties owned by other
    mall REITs.  
    Manage Property Intensively.  The core of our
    management strategy is to increase shopper traffic through our
    malls, which improves tenant sales volume and, ultimately,
    rental rates. In certain cases, we may evaluate the replacement
    of heating, ventilation and air conditioning systems in order to
    reduce the cost of energy.
    Pursue Additional Targeted Property
    Acquisitions.  Our strategy is to
    opportunistically acquire underperforming or distressed malls
    and to transform them into Class A or near Class A
    malls through a comprehensive renovation and repositioning
    process. We intend to carefully select and acquire existing
    malls that fit our acquisition investment criteria, which
    extends generally to well-located properties that are
    underperforming due to vacant anchors, outdated designs and
    appearance, poor tenant mixes, mismanagement, or changing retail
    trends. We will tap our network of contacts within the finance,
    retail and real estate industry to locate underperforming malls
    at attractive prices.
    Focus on Markets with Strong Demographics.  We
    will seek to acquire large underperforming or distressed malls
    that exhibit strong market characteristics and demographics,
    including proximity to major highways, dense population centers
    and retail hubs, rising population and income trends and
    manageable competition in relation to local population densities.  Our
    Financing Strategies
      Competition
  25-mile
     9




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Employees
    Segment
    Information
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K 1-800-SEC-0330 Forms 10-K, 10-Q, 8-K
  Recent
    Developments
  A.
    Financing
    Activity  Junior
    Subordinated Notes
    Convertible
    Preferred Equity Financing
   10




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12-month
      $25
    Million Credit Facility
    five-day
    Secured
    Line of Credit
      Colonie
    Center Financing
    Stratford
    Square Financing
   11




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B.
    Property
    Activity  Golden
    Triangle Acquisition
    JCPenney
    Building Acquisition
    Foothills
    Joint Venture
    Colonie
    Center Joint Venture
    C.
    Dividend    D.
    Other  Appointment
    of New Board Member
     12




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Lloyd
    Miller  EVP of Leasing
    ITEM 1A.
    RISK
    FACTORS  Risks
    Related to Our Properties and Operations
  Our
    investments in underperforming or distressed malls could be
    subject to higher than anticipated costs and unexpected
    redevelopment delays, which would adversely affect our
    investment returns, harm our operating results and reduce funds
    available for distributions to our stockholders.
    The
    assumptions we make in evaluating a renovation or repositioning
    opportunity may not prove to be correct and, as a result, our
    investment returns may be adversely impacted.
    Our
    properties are limited to seven geographic areas leaving us
    exposed to economic downturns in those areas.
    We may
    seek to acquire, renovate and reposition a property in a new,
    less familiar geographic area, and such an expansion may not
    prove successful or achieve expected performance even if
    successfully completed.
   13




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We
    have a limited operating history and might not be able to
    operate our business or implement our strategies
    successfully.
    Managements
    Internal Control Assessment
    Any
    tenant bankruptcies or leasing delays we encounter, particularly
    with respect to our anchor tenants, could adversely affect our
    operating results and financial condition.
      Certain
    provisions of our leases with some of our tenants may harm our
    operating performance.
  and/or
   14




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Adverse
    economic or other conditions in the markets in which we do
    business could negatively affect our occupancy levels and rental
    rates and therefore our operating results.
    
    the national economic climate and the local or regional economic
    climate in the markets in which we operate, which may be
    adversely impacted by, among other factors, industry slowdowns,
    relocation of businesses and changing demographics;
    periods of economic slowdown or recession, rising interest rates
    or the public perception that any of these events may occur,
    which could result in a general decline in rent under our leases
    or an increase in tenant defaults;
    local or regional real estate market conditions such as the
    oversupply of shop space in a particular area;
    negative perceptions by retailers or shoppers of the safety,
    convenience and attractiveness of our properties and the areas
    in which they are located;
    increases in operating costs, including the need for capital
    improvements, insurance premiums, real estate taxes and
    utilities;
    changes in supply of or demand for similar or competing
    properties in an area;
    the impact of environmental protection laws;
    earthquakes and other natural disasters, terrorist acts, civil
    disturbances or acts of war which may result in uninsured or
    underinsured losses; and
    changes in tax, real estate and zoning laws.  Competition
    may impede our ability to renew leases or re-let space as leases
    expire and require us to undertake unbudgeted capital
    improvements, which could harm our operating
    results.
    
    The Harrisburg Mall faces competition from two regional malls, a
    lifestyle center and four power centers located within
    10 miles of the property.
    The Foothills Mall faces competition from three regional malls
    and seven power centers within 12 miles of this property.
    We expect the construction of new retail properties to increase
    modestly in proportion to demand so that vacancy levels remain
    low.
    The Colonie Center Mall faces competition from three regional
    malls described below that comprise approximately
    3.2 million square feet of shop space. Four power centers
    that comprise approximately 2.2 million square feet are
    located within five miles of the property. With four established
    anchor tenants, two unique junior anchor tenants and a
    well-balanced mix of shop tenants, Colonie Center is one of the
    dominant, super-regional malls in its trade area.
    The Stratford Square Mall faces competition from two
    super-regional shopping centers situated within Stratford Square
    Malls trade region. In addition, there are two smaller
    malls that compete to a lesser degree with Stratford.
    The Tallahassee Mall faces competition from Governors
    Square Mall, which is a super-regional mall located
    approximately five miles southeast of the Tallahassee Mall. 15




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##### Table of Contents




    The Northgate Mall faces competition from three super-regional
    malls that comprise approximately 4.8 million square feet
    of shop space. Additional retail competition totals an
    additional 2.7 million square feet, including one power
    center.
    The Golden Triangle Mall faces competition from two
    super-regional malls within 18 miles and two smaller malls
    that compete to a lesser degree with Golden Triangle. In
    addition, a new mixed-use development with a life style center
    is scheduled to open in 2009 and a new super-regional mall,
    scheduled to open in 2007, will be primary competitors.    Our
    leases do not allow us to pass on all real estate related costs
    to our tenants and, if such costs increase, they could reduce
    our cash flow and funds available for
    distributions.
    We may
    not be successful in identifying and consummating suitable
    acquisitions that meet our investment criteria, which may impede
    our long-term growth and negatively affect our long-term results
    of operations.
  property-by-property market-by-market
    
    competition from local investors and other real estate investors
    with significant capital, including other publicly traded REITs
    and institutional investment funds, that may significantly
    increase the purchase price of the property, which could reduce
    our profitability;
    unsatisfactory completion of due diligence investigations and
    other customary closing conditions;
    failure to finance an acquisition on favorable terms or at
    all; or
    acquisitions of properties subject to liabilities and without
    any recourse, or with only limited recourse, with respect to
    unknown liabilities such as liabilities for
    clean-up of
    undisclosed environmental contamination, claims by persons
    dealing with the former owners of the properties and claims for
    indemnification by general partners, directors, officers and
    others indemnified by the former owners of the properties. 16




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We may
    not be successful in integrating and operating acquired
    properties which could adversely affect our results of
    operations.
    Uninsured
    losses or losses in excess of our insurance coverage could
    result in a loss of our investment, anticipated profits and cash
    flow from a property.
    Increases
    in taxes and regulatory compliance costs may reduce our
    revenue.
    Joint
    venture investments could be subject to additional risks as a
    result of our lack of sole decision-making
    authority.
  and/or
 17




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Risks
    Related to the Real Estate Industry
  Any
    negative perceptions of the mall industry generally by the
    investing public may result in a decline in our stock
    price.
    Illiquidity
    of real estate investments could significantly impede our
    ability to respond to adverse changes in the performance of our
    properties.
      We
    could incur significant costs related to environmental
    matters.
       18




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Costs
    associated with complying with the Americans with Disabilities
    Act of 1990 may result in unanticipated
    expenses.
    Risks
    Related to Our Organization and Structure
  Our
    management team received material benefits upon completion of
    the Companys initial public offering, including an 11.7%
    equity stake in our Company which could allow them to exercise
    significant influence over matters submitted to our
    stockholders.
   19




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Conflicts
    of interest could arise as a result of our relationship with our
    operating partnership and the resolution of such conflicts may
    not be in our favor.
               20




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Conflicts
    of interest between management and our stockholders may arise
    that could impact potential dispositions.
    Our
    managements right to receive OP units upon the achievement
    of certain performance thresholds relating to the Harrisburg
    Mall may cause them to devote a disproportionate amount of time
    to such performance thresholds, which could cause our overall
    operating performance to suffer.
      We may
    pursue less vigorous enforcement of terms of contribution,
    merger and other related agreements because of conflicts of
    interest with certain of our officers.
  and/or
  None
    of the contribution agreements was the result of
    arms-length negotiations and may not reflect terms
    comparable to those that could have been obtained from
    unaffiliated third parties.
    Our
    organizational documents, including the stock ownership limit
    imposed by our charter, may inhibit market activity in our stock
    and could delay, defer or prevent a change in control
    transaction.
   21




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Certain
    provisions of Maryland law could inhibit changes in
    control.
    Our
    board of directors has the power to issue additional shares of
    our stock in a manner that may not be in your best
    interests.
    Our
    rights and the rights of our stockholders to take action against
    our directors and officers are limited.
   22




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Our
    business could be harmed if key personnel with long standing
    business relationships in the real estate business terminate
    their employment with us.
    Risks
    Related to Our Organization and Operation as a REIT
  To
    maintain our REIT status, we may be forced to borrow funds on a
    short-term basis during unfavorable market
    conditions.
    Distributions
    payable by REITs do not qualify for the reduced tax rates under
    recently enacted tax legislation.
      Possible
    legislative or other actions affecting REITs could reduce our
    total return to our stockholders or cause us to terminate our
    REIT status.
     23




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If we
    fail to qualify as a REIT, our distributions will not be
    deductible by us and we will be subject to corporate level tax
    on our taxable income. This would reduce the cash available to
    make distributions to our stockholders and may have significant
    adverse consequences on the value of our stock.
    
    we would not be allowed a deduction for distributions to
    stockholders in computing our taxable income and would be
    subject to U.S. federal income tax at regular corporate
    rates;
    we also could be subject to the U.S. federal alternative
    minimum tax and possibly increased state and local
    taxes; and
    unless we are entitled to relief under applicable statutory
    provisions, we could not elect to be taxed as a REIT for the
    four taxable years following a year during which we were
    disqualified.      We
    will pay some taxes which will reduce the amount of funds
    available to make distributions to our
    stockholders.
   24




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##### Table of Contents



Risks
    Related to Our Debt Financings
  Required
    payments of principal and interest on borrowings may leave us
    with insufficient cash to operate our properties or to pay the
    distributions currently contemplated or necessary to maintain
    our qualification as a REIT and may expose us to the risk of
    default under our debt obligations.
      
    our cash flow may be insufficient to meet our required principal
    and interest payments;
    we may be unable to borrow additional funds as needed or on
    favorable terms, including to make acquisitions or distributions
    required to maintain our REIT status;
    we may be unable to refinance our indebtedness at maturity or
    the refinancing terms may be less favorable than the terms of
    our original indebtedness;
    an increase in interest rates could materially increase our
    interest expense;
    we may be forced to dispose of one or more of our properties,
    possibly on disadvantageous terms;
    after debt service, the amount available for distributions to
    our stockholders is reduced;
    our debt level could place us at a competitive disadvantage
    compared to our competitors with less debt;
    we may experience increased vulnerability to economic and
    industry downturns, reducing our ability to respond to changing
    business and economic conditions;
    we may default on our obligations and the lenders or mortgagees
    may foreclose on our properties that secure their loans and
    receive an assignment of rents and leases;
    we may violate restrictive covenants in our loan documents,
    which would entitle the lenders to accelerate our debt
    obligations; and
    our default under any one of our mortgage loans with
    cross-default or cross-collateralization provisions could result
    in default on other indebtedness or result in the foreclosures
    of other properties.  Our
    organizational documents contain no limitations on the amount of
    indebtedness we may incur, and our cash flow and ability to make
    distributions could be adversely affected if we become highly
    leveraged.
  and/or
  Increases
    in interest rates may increase our interest expense and reduce
    our cash flow and impair our ability to service our indebtedness
    and make distributions to our stockholders.
   25




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Our
    cash flow is not assured. If our cash flow is reduced, we may
    not be able to make distributions to our
    stockholders.
  Form 10-K.
      ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   26




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ITEM 2.
    PROPERTIES    Wholly
    Owned Properties
  ShopYear Built/










Shop


Shop





TenantMost

Total


Rentable





Tenant


Tenants


Annualized


Base RentRecent

Square


Square


Percentage


Square


Percentage


Base


per Leased


Owned

Non-OwnedProperty

Renovation

Feet


Feet


Leased


Feet


Leased


Rent


Sq. Ft.


Anchors

AnchorsStratford Square

1966/1999


1,300



629



90.6
%


485



66.4
%

$
5,991


$
24.81


JCPenney

Marshall
    Fields; Sears;
    Carson Pirie 
    Scott; Burlington 
    Coat Factory;
    KohlsTallahassee Mall

1971/1993


966



966



96.0



204



79.0



7,249



22.60


Dillards; Belks;
    Burlington Coat Factory; AMC Theaters

Northgate Mall

1972/1993


1,100



577



90.9



315



89.4



7,805



23.55


Macys

Dillards:
    JCPenney;
    SearsGolden Triangle

1969/2004


765



288



99.0



171



66.0



3,087



20.35




Sears;
    JCPenney;
    Dillards;
    Macys; DSWTotal/Weighted Average




4,131



2,460



93.8
%


1,175



74.7
%

$
24,132


$
23.17   Joint
    Venture Properties
  ShopYear Built/










Shop


Shop





TenantMost

Total


Rentable





Tenant


Tenants


Annualized


Base RentProperty

Recent

Square


Square


Percentage


Square


Percentage


Base


per Leased


Owned

Non-Owned(Ownership Interest)

Renovation

Feet


Feet


Leased


Feet


Leased


Rent


Sq. Ft.


Anchors

AnchorsFoothills Mall (31)%

1983/2004


711



502



98.6
%


230



96.4
%

$
7,811


$
21.48


Barnes & Noble;
    Linens N Things;
    AMC Cineplex;
    Ross Dress
    for Less;
    Saks Off
    5th Ave;
    Nike

Wal-MartColonie Center Mall (25)%

1969/1994


1,200



668



93.2



336



78.0



7,574



27.40


Boscovs;
    Christmas Tree
    Shops

Macys; SearsHarrisburg Mall (25)%

1969/2004


922



922



88.3



270



58.8



5,016



24.46


Bass Pro Shops; 
    Boscovs;
    Macys

Total/Weighted Average




2,833



2,092



92.3
%


836



76.9
%

$
20,401


$
24.41     
    Total Square Feet includes Rentable Square Feet and the square
    feet occupied by nonowned anchor tenants.
    Rentable Square Feet includes all owned square feet, including
    owned-anchor square feet.
    Shop Tenant Square Feet consists of all Rentable Square Feet,
    less (a) anchor and junior anchor square feet, (b) all
    out parcel square feet, and (c) non-retail square feet.
    Percentage Leased is calculated based on leases executed as of
    December 31, 2006 and includes owned anchor tenant space.
    Shop Tenants Percentage Leased is calculated based on leases
    executed as of December 31, 2006 by shop tenants and
    non-anchor tenants. These figures exclude leases to tenants
    under temporary leases, which are leases for an initial term of
    less than one year. 27




---



##### Table of Contents




    Annualized Base Rent is calculated based on monthly base rent
    derived from 100% of our existing lease agreements executed as
    of December 31, 2006 and annualized for a
    12-month
    period, except as set forth below. The Annualized Base Rent
    figures appearing in the table above are based on net rent,
    which means that the rent shown above does not include certain
    additional charges that are passed on to the tenants, including
    common area maintenance charges and real estate taxes.
    Annualized Base Rent does not include (a) any additional
    revenues from temporary or month-to-month tenants or tenants
    paying rent based on a percentage of the tenants sales,
    (b) lease-up
    of vacant space, (c) rental increases occurring after
    December 31, 2006 or (d) pass-through of operating
    expenses to tenants.
    Shop Tenant Base Rent Per Leased Square Foot is calculated based
    on monthly base rent derived from shop tenant leases executed
    and in occupancy as of December 31, 2006 and annualized for
    a 12-month
    period, with the product divided by the rentable square feet
    leased to shop tenants as of such date.
    Non-owned Anchor Tenants are anchor tenants of the mall, but we
    do not own their improvements or their underlying land and
    therefore we will not collect rent from these retailers. We
    refer to these retailers as non-owned anchor tenants. We believe
    non-owned anchor tenants are important to a property because the
    attractiveness of the anchor retailers at the property (whether
    or not we collect rent from them) may significantly affect the
    leasing of owned space and shop tenant sales at the property.
    Wal-Mart is a non-owned anchor tenant of the Foothills Mall and
    occupies and owns a super center consisting of approximately
    210,000 square feet, which shares a common parking lot and
    entrance road with the Foothills Mall.  Tenant
    Diversification
    Top 10
    Tenants by Annualized Base Rent
  % of Total











FeldmanPrincipal






Rentable





% of Total





Share ofMall

Nature of

Lease

Rentable


Square


Annualized


Annualized


Base Rent


AnnualizedTenant

Location

Business

Expiration

Sq. Feet


Feet(1)


Base Rent


Base Rent


per Sq. Ft.


Base Rent1


Loews Cineplex and
    AMC Theaters(merged in January 2006)

Foothills 
    Tallahassee

Multi Screen 
    Movie Theatre

2014 - 2017


146,500



3.8
%

$
2,217,860



4.5
%

$
15.14


$
1,401,5322


Macys

Northgate, Harrisburg

Department Store

2014 - 2024


367,280



9.6
%


1,950,000



4.0
%


5.31



1,800,0003


Boscovs

Colonie
    Harrisburg

Discount Department
    Store

2007 - 2023


420,248



11.0
%


1,117,000



2.3
%


2.66



279,2504


Christmas Tree Shops (a division of
    Bed Bath & Beyond)

Colonie

Discount Store

2018


56,300



1.5
%


943,025



1.9
%


16.75



235,7565


Bass Pro Shops

Harrisburg

Sportsmans Superstore

2019


219,269



5.7
%


843,832



1.7
%


3.85



210,9586


FYE/Recordtown

Colonie, Stratford

Electronics

Various


41,954



1.1
%


672,992



1.4
%


32.07



372,9927


Toys R Us

Harrisburg

Toy Store

2023


45,950



1.2
%


451,524



0.9
%


9.83



112,8818


Linens N Things

Foothills

Discount Store

2013


41,480



1.1
%


414,800



0.8
%


10.00



127,7589


Parisian

Tallahassee

Department Store

2013


114,689



3.0
%


400,000



0.8
%


3.49



400,00010


Sports Authority

Tallahassee

Sporting Goods

2013


46,526



1.2
%


395,471



0.8
%


8.50



395,471Total/Weighted Average








1,500,196



39.2
%

$
9,406,504



19.1
%

$
6.27


$
5,336,598     (1)
    
    The percentage of Total Rentable Square Feet excludes non-owned
    anchor tenants. 28




---



##### Table of Contents



Lease
    Expiration
    Lease
    Expiration Table  Total Portfolio
  % of Total Sq.








ExpiringNumber of


Expiring


Ft.


Expiring Base


% of Total Base


Base RentLease Expiration Year

Expiring Leases


Rentable Area(1)


Expiring


Rent(2)


Rent


per Sq. Ft.2007


69



183,373



5.33
%

$
3,483,808



7.82
%

$
19.002008


84



357,069



10.37



4,393,557



9.87



12.302009


68



181,626



5.28



3,776,696



8.48



20.792010


58



208,211



6.05



4,113,622



9.24



19.762011


63



251,885



7.32



5,102,947



11.46



20.262012


32



249,834



7.26



2,844,337



6.39



11.382013


35



326,337



9.48



3,901,718



8.76



11.962014


33



307,085



8.92



4,355,638



9.78



14.182015


22



90,651



2.63



1,768,042



3.97



19.502016 and thereafter


48



1,285,990



37.36



10,792,628



24.23



7.97Total/Weighted Average


512



3,442,061



100.0
%

$
44,532,993



100.0
%

$
12.78     (1)
    
    Expiring rentable area excludes 59,662 square feet of
    unleased space as of December 31, 2006 and
    210,711 square feet on tenants paying percentage rent.(2)
    
    Annualized base rent as of December 31, 2006 (leases
    executed as of that date). Excludes revenues from leases to
    tenants under temporary leases or tenants paying rents on a
    percent-of-sales basis.  Wholly
    Owned Properties
  Stratford
    Square Mall
  Overview
         29




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##### Table of Contents



Anchor
    Tenant Sales Versus Shop Tenant Sales
        Renovation
    and Repositioning Plan
    
    New Movie Theatre Tenant.  We have signed a
    lease with Cinemark Theatres and are under construction to build
    a high-end movie theatre. We plan to boost shopper traffic and
    tenant sales by sharply upgrading and expanding the existing
    four-screen movie theatre into a state-of-the-art, multi-screen
    cineplex. This theatre is being built to specifications that
    will be significantly higher in quality than most of the
    theatres in the Chicago marketplace. Similar to our Foothills
    Mall property, the objective is to support the shop tenants with
    a movie theatre that will be entered only through the interior
    of the mall. The theater is expected to help generate leases
    with a series of restaurant tenants.
    Redirecting Anchor Tenant Traffic.  We will
    improve the appearance and ambience of the mall by undertaking
    major renovations of the interior common areas and the mall
    entrances. The objective with respect to this renovation will be
    to create a unique series of indoor mall features that will
    complement the malls attractive architecture. Improvements
    under construction or recently completed include television
    viewing areas with comfortable leather sofa seating and modern
    full-size flat screen televisions and the addition of another
    large high-end childrens play area. In addition, indoor
    and outdoor restaurant seating will be encouraged throughout the
    mall, with café style seating overlooking the mall
    corridors.
    Signage.  We will improve the visibility of the
    mall by adding significantly upgraded signage, including a
    series of new pylon signs (subject to municipal approvals) that
    will be visible from nearby local roads.
    Restaurants.  We will focus a significant
    portion of our leasing efforts towards tenants that are
    entertainment and tourist destinations, such as upscale and
    trendy restaurants and arcades.    Financing
     30




---



##### Table of Contents



Location
    and Demographics
    
    Population.  The suburban Chicago population
    within a
    15-mile
    radius of Stratford Square is approximately 2.0 million
    people according to Claritas.
    Population Growth.  The population within a
    15-mile
    radius of Stratford Square is estimated to have grown by
    approximately 2.1% from 2000 to 2006 and is projected to grow by
    an additional 1.8% from 2006 to 2011 according to Claritas.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of the Stratford Square Mall was estimated to be $89,108
    according to Claritas.
    Local Market Characteristics.  Chicago is
    recognized as one of the most important industrial and financial
    centers in the United States. It is the nations largest
    producer of steel and machinery, has the worlds largest
    commodities market and is the nations largest wholesaling
    center. Chicagos mid-continent location and accessibility
    via both land and water have made it the central hub of the
    United States.    Competition
    
    Woodfield Mall.  The 2.3 million
    square-foot Woodfield Shopping Center is anchored by Nordstrom,
    Marshall Fields, Lord & Taylor, Sears and
    JCPenney and is located approximately eight miles from Stratford
    Square.
    Oakbrook Center.  The 2.0 million
    square-foot Oakbrook Center is an outdoor mall anchored by
    Nordstrom, Marshall Fields, Neiman-Marcus,
    Bloomingdales, Lord & Taylor and Sears and is
    located about 11 miles from Stratford Square.
    Charlestown Mall.  The recently upgraded
    832,000 square-foot Charlestown Mall is anchored by
    Carsons, Von Maur, Sears and Kohls and is located
    eight miles from Stratford Square.
    Yorktown Shopping Center.  The 1.6 million
    square-foot Yorktown Shopping Center is anchored by
    Carsons, Von Maur, JCPenney and Target and is located
    about 10 miles from Stratford Square. 31




---



##### Table of Contents



Average
    Occupancy Rate and Base Rent  Stratford
    Square(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


62
%

$
26.732005


62
%

$
27.742004


69
%

$
23.962003


75
%

$
23.712002


79
%

$
22.38     (1)
    
    The information in this chart prior to our acquisition in
    December 2004 was supplied by or derived from information
    provided by the seller of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Tallahassee
    Mall
  Overview
        line-up,
  10-mile
  Anchor
    Tenant Sales and Shop Tenant Sales
     32




---



##### Table of Contents



Financing
    Renovation
    and Repositioning Plan
    
    New Upscale Junior Anchor Tenants.  We are
    currently targeting a number of potential junior anchor tenants
    that will increase shopper traffic to the mall.
    Increase the square footage of in-line shop
    space.  We plan on increasing the in-line shop
    square feet of the property that would be consistent with our
    strategy of adding a streetscape theme to the front
    of the mall.
    Appearance.  We intend to improve the
    appearance of the mall by undertaking major renovations of the
    interior common areas and the mall entrances.    Location
    and Demographics
    
    Population.  The Tallahassee metropolitan
    statistical area population within a
    15-mile
    radius of the Tallahassee Mall is approximately 272,000
    according to Claritas. This figure excludes a large and growing
    college population of 65,000 students.
    Population Growth.  The population within a
    15-mile
    radius of the Tallahassee Mall is estimated to have grown by
    approximately 7.7% from 2000 to 2006 and is projected to grow by
    9.4% from 2006 to 2011 according to Claritas.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of the Colonie Center was estimated to be $58,855
    according to Claritas.
    Local Market Characteristics.  With stable
    growth and expansion in the area, the Tallahassee employment
    rates have remained relatively low at 5.6% in 2006. The
    unemployment rates stability is largely due to the state
    government work force as well as to high quality educational
    institutions and a stable community. This student population and
    stable government workforce provides a steady pool of consumers
    for area retailers.  Competition
    
    Governors Square Mall.  The
    Governors Square Mall is located in Tallahassee,
    approximately five miles from the Tallahassee Mall.
    Governors Square is on the Apalachee Parkway and is
    accessible from Highway 10 and Route 261. The anchor tenants
    include Macys, Dillards, JCPenney, and Sears.
    Governors Square is a two-story super-regional mall
    totaling 1 million square feet. The malls occupancy
    is competitive, with a traditional middle market merchandising
    mix. 33




---



##### Table of Contents



Average
    Occupancy Rate and Base Rent  Tallahassee
    Mall(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


79
%

$
23.032005


80
%

$
20.242004


72
%

$
16.532003


73
%

$
20.362002


76
%

$
21.84     (1)
    
    The information in this chart prior to our acquisition in June
    2005 was supplied by or derived from information provided by the
    seller of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Northgate
    Mall
  Overview
      Anchor
    Tenant Sales versus Shop Tenant Sales
    Financing
    Renovation
    and Repositioning Plan
    
    New Upscale Junior Anchor Tenants.  Discussions
    have begun with junior anchor tenants, whose use and shopper
    appeal is ideally suited to the repositioning plan. 34




---



##### Table of Contents




    Appearance.  A new lifestyle streetscape
    area is being planned for the malls exterior facing
    Colerain Avenue. Additional retailers will be added along this
    streetscape with a multi-million dollar upgrade to the
    malls main entrance, streetscape sidewalks, lighting and
    facades. This will enhance the overall appearance and will help
    attract marquee tenants which will have the ability to have
    frontage along Colerain Avenue. We also intend to improve the
    appearance of the mall by undertaking major renovations of the
    interior common areas and the mall entrances.
    Signage.  We will improve the visibility of the
    mall by adding significantly upgraded signage.
    Entertainment.  A key part of the renovation
    will include building an entertainment-style theme which will
    include a high-end stadium-seated movie theatre.    Location
    and Demographics
      
    Population.  Cincinnati is the second largest
    metropolitan area in Ohio spanning 13 counties in Ohio, Kentucky
    and Indiana, with a total population of over 2 million.
    Population Growth.  While the population of the
    city of Cincinnati has decreased, the surrounding suburban
    townships and communities have seen substantial increases.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of Northgate was estimated to be $65,911 according to
    Claritas.
    Local Market Characteristics.  In 2006, the
    civilian labor force within a
    15-mile
    radius of Northgate was approximately 572,000 and the average
    unemployment rate was only 3.1%.  Competition
    
    Tri-County Mall.  The 1.3 million
    square-foot, two-level regional mall is located approximately
    nine miles to the east along I-275. Tri-Countys primary
    trade area is the area immediately north and east along I-275.
    The mall is anchored by Macys, Dillards and Sears
    and includes traditional mall tenants that focus on the
    mid-price point. The mall generates sales of approximately $320
    per square foot and is 94% leased.
    Cincinnati Mills.  The two-level,
    1.5 million square-foot big box, entertainment and
    lifestyle center opened in August 2004. The property is located
    approximately six miles east of Northgate Mall, in Fairfield,
    and has Bass Pro Shops, Babys R Us, Biggs,
    Kohls, Saks Off
    5th,
    Showcase Cinemas (10-screen theater) and Media Play. The in-line
    tenancy is primarily comprised of outlet discount tenants and a
    few national tenants.
    Kenwood Towne Center.  Located 13 miles
    southeast of the Northgate Mall, Kenwood Towne Center anchors
    the I-71 corridor retail market with in-line tenant sales in
    excess of $500 per square foot. The 1.1 million square-foot
    super-regional mall serves the affluent northeast communities.
    The mall is anchored by Dillards, Macys, Parisian
    and Loews Theatres and includes numerous upscale retailers such
    as Coach, Abercrombie & Fitch, Banana Republic,
    Pottery Barn, Williams-Sonoma, Bebe, Chicos and
    Talbots. 35




---



##### Table of Contents



Kenwood Towne Center recently completed a
    100,000 square-foot addition and interior renovation and
    added Cheesecake Factory and Maggianos to the exterior of
    the mall.  
    Colerain Avenue Retail.  Along Colerain Avenue,
    there are approximately 2.0 million square feet of
    additional retail shops including free-standing stores and
    community and power centers. In addition to the centers listed
    below, Colerain Avenue has free-standing Target, Kmart,
    Lowes Homestore, Home Depot, Staples and Kroger stores.
    Colerain Towne Center.  A
    370,000 square-foot power center anchored by Wal-Mart,
    Dicks, Office Max, Petsmart and TJ Maxx is located along
    Colerain Avenue directly north of I-275. Wal-Mart is reportedly
    going to be relocated in order to open a super center.  Average
    Occupancy Rate and Base Rent  Northgate
    Mall(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


77
%

$
24.032005


78
%

$
22.452004


72
%

$
16.532003


73
%

$
20.362002


76
%

$
21.84     (1)
    
    The information in this chart prior to our acquisition in July
    2005 was supplied by or derived from information provided by the
    seller of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Golden
    Triangle Mall
  Overview
         36




---



##### Table of Contents



Anchor
    Tenant Sales Versus Shop Tenant Sales
        Renovation
    and Repositioning Plan
      Financing
    Location
    and Demographics
    
    Population.  The suburban Dallas population
    within a
    15-mile
    radius of Golden Triangle is approximately 427,000 people
    according to Claritas.
    Population Growth.  The population within a
    15-mile
    radius of Golden Triangle is estimated to have grown by
    approximately 32.2% from 2000 to 2006 and is projected to grow
    by an additional 20.9% from 2006 to 2011 according to Claritas.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of Golden Triangle was estimated to be $85,495 according
    to Claritas.
    Local Market Characteristics.  Dallas
    represents the
    10th largest
    metropolitan area in the nation and the third largest in the
    south behind Houston and Atlanta. The combined
    Dallas/Fort Worth area, or Metroplex,
    encompasses a population of more than 5.7 million people.
    Migration in the Metroplex continues to spread increasingly
    northward, resulting in tremendous population gains in the
    county and city of Denton.   37




---



##### Table of Contents



Competition
    
    Vista Ridge Mallis located 14 miles southeast of
    Golden Triangle in Lewisville and consists of 1.1 million
    square feet of total gross leasable area and is home to 168
    stores. Categorized as a super-regional mall, Vista Ridge Mall
    is larger in size than Golden Triangle, but shares a similar
    in-line tenant mix and has four anchor tenants in common with
    Golden Triangle  Dillards, Foleys,
    JCPenney and Sears. Built in 1989 and remodeled in 1991, Vista
    Ridge Mall represents primary competition to Golden Triangle due
    to its in-line tenant mix and anchor stores.
    Stonebriar Centreis located approximately 18 miles
    southeast of the Golden Triangle in the City of Frisco. The
    two-story super-regional mall opened in 2000. Stonebriar Centre
    is more than double the size of Golden Triangle, consisting of
    1.6 million square feet of total GLA and more than
    525,000 square feet of in-line GLA. Stonebriar Centre
    includes 163 traditional and upscale in-line tenants such as
    Chicos, Coach, J. Crew, Pottery Barn and Williams-Sonoma.
    Stonebriar Centre is anchored by Foleys, JCPenney,
    Macys, Neiman Marcus and Sears and includes an AMC
    Theatre. Due to the malls shared anchors and relative
    location, Stonebriar Centre represents primary competition for
    the Golden Triangle; Stonebriar Centres distance and more
    upscale tenancy make the mall comparatively less competitive
    with Golden Triangle.
    Denton Crossingis a 488,000 square-foot power
    center located one mile northeast of Golden Triangle off of Loop
    288. Opened in 2004, Denton Crossing includes such national
    big-box tenants as Bed, Bath & Beyond, Best Buy,
    Kroger Supermarket, Michaels, Pier 1 Imports, T.J. Maxx
    and Walgreens. Because of Denton Crossings big-box tenant
    mix, the power center does not represent primary competition to
    Golden Triangle. Denton Crossings close proximity to
    Golden Triangle bodes well for both retail centers, which
    together create a synergy of retail offerings along the Loop 288
    corridor.
    The Shops at Circle T Ranchis scheduled for completion
    in 2007 and will be located 14 miles southwest of Golden
    Triangle in the City of Westlake. This super-regional mall will
    include 1.3 million square feet of total GLA and while
    in-line tenants have yet to be determined, the mall is set to be
    anchored by Dillards, Foleys and AMC Theatres. Upon
    completion, The Shops at Circle T Ranch will serve as primary
    competition to Golden Triangle due to shared anchor tenants and
    relative proximity to Golden Triangle.
    Grapevine Millsis located 20 miles south of Golden
    Triangle and just two miles from the Dallas/Forth Worth
    International Airport and serves as a major retail and
    entertainment destination for residents and tourists visiting
    the Dallas metro area. Grapevine Mills includes a unique tenant
    mix of specialty stores (Virgin Megastore), outlets (Neiman
    Marcus, Saks), manufacturer stores, (Burlington Coat Factory),
    entertainment (ESPN X Games Skate Park) and themed restaurants
    (Rainforest Café). Opened in 1997, Grapevine Mills serves
    as secondary competition to Golden Triangle due to its unique
    tenant mix and geographical distance from Golden Triangle.
    Rayzor Ranchis a 400 acre mixed-use development
    that will include a proposed lifestyle center that may total
    1.2 million square feet. The proposed lifestyle center may
    contain fashion-oriented tenants and a movie theater. In
    addition to the lifestyle center, Rayzor Ranch may also include
    office and residential development. Rayzor Ranch will be located
    less than five miles from Golden Triangle and has not yet begun
    construction. The development is scheduled to open in 2009. 38




---



##### Table of Contents



Average
    Occupancy Rate and Base Rent  Golden
    Triangle(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


66
%

$
20.352005


62
%

$
27.742004


69
%

$
23.962003


75
%

$
23.712002


79
%

$
22.38     (1)
    
    The information in this chart prior to our acquisition in April
    2006 was supplied by or derived from information provided by the
    seller of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Joint
    Venture Properties
  Foothills
    Mall
  Overview
  th
       39




---



##### Table of Contents



Renovation
    and Repositioning
    
    Redirecting Loews Cineplex Traffic.  Our
    predecessor sharply increased shopper traffic by sealing off an
    exterior entrance to the Loews Cineplex theatre and thereby
    redirected theatre patrons through the interior of the mall. The
    15-screen Loews Cineplex is one of the Foothills Malls
    major anchor tenants and is the largest tenant in the Foothills
    Mall based on rental revenue.
    Leasing Initiatives.  We are conducting an
    intensive leasing initiative which includes the following:
    (i) filling missing product categories and attracting
    strong brand name tenants such as Old Navy, who recently
    executed a new lease for approximately 15,000 square feet,
    (ii) renewing existing high volume tenants at the best
    possible market rental rates, (iii) eliminating unhealthy,
    low volume or unprofitable stores, (iv) filling certain
    difficult-to-lease vacant spaces with temporary tenants until
    leases with long-term tenants are in place and (v) focusing
    on obtaining at least one additional major anchor tenant on the
    southwest corner of the mall.
    Food Court and Amenities.  We are improving
    shopper comfort and amenities, including high quality restrooms,
    a new floor, new tables and soft seating areas in the food court
    and new soft seating areas in other parts of the mall. Some of
    these seating areas will feature large flat screen televisions
    and are designed to induce patrons to stay in the mall while
    their friends or family continue to shop.
    Public Marketing Campaigns.  We are conducting
    special public marketing campaigns with the objective of having
    community and other group events in the mall on a regular basis,
    such as car sales, rock groups, sports promotions, radio station
    events and civic and charitable functions.
    Potential Expansion.  The Foothills Mall
    property has the potential to be expanded by approximately
    80,000 rentable square feet. We are in discussions with
    several potential junior anchor tenants for the pre-leasing of
    this space.  Financing
  30-year
 40




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##### Table of Contents



Location
    and Demographics
    
    Population.  Tucson is Arizonas second
    largest city with a metropolitan statistical area population of
    843,746, according to the US Census Bureau Census 2000.
    Population Growth.  Tucson is estimated to be
    one of the fastest-growing cities in the United States. The
    population within a
    15-mile
    radius of the Foothills Mall is estimated to have grown by 8.7%
    from 2000 to 2006 and is projected to grow by 8.2% from 2006 to
    2011, according to Claritas.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of the Foothills Mall was estimated to be $56,767,
    according to Claritas.
    Local Market Characteristics.  A new community
    college has recently opened within walking distance of the
    Foothills Mall with approximately 4,000 students.  Competition
    
    El Con Mall.  The El Con Mall is a
    1.2 million square-foot mall and is located approximately
    12 miles southeast of the Foothills Mall. The mall was
    originally built in 1962 and partially renovated in 1996. It has
    a 20-screen Century Theatre and a Home Depot and is seeking to
    add an additional discount retailer. Existing anchor tenants
    include JCPenney and Macys.
    Park Place Mall.  The Park Place Mall is a
    single level enclosed mall, which contains approximately
    1.0 million square feet and is located 12 miles from
    the Foothills Mall. It is approximately 97% occupied and is
    anchored by Dillards, Macys and Sears. Other tenants
    in the mall include Borders Books, Century Theatre and Old Navy.
    This mall recently completed a renovation process, which
    included the addition of street retailers, a food
    court, mall shops, restaurants, theatres and a new
    Dillards.
    Tucson Mall.  The Tucson Mall is a
    1.3 million square-foot mall that has been considered the
    dominant mall in Tucson for nearly 20 years. The property
    is located approximately five miles southeast of the Foothills
    Mall. This mall was constructed in 1982 and renovated in 1991.
    Dillards, JCPenney, Macys, Mervyns and Sears are the
    anchor tenants.
    La Encantada.  La Encantada is a
    258,000 square-foot mall located approximately
    13 miles from Foothills. The mall opened in November 2003.
    It is an open air lifestyle center featuring upscale shops. Its
    anchor tenants are AJs Fine Foods, Crate &
    Barrel and Pottery Barn. 41




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##### Table of Contents



Average
    Occupancy Rate and Base Rent  Foothills
    Mall(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


95
%

$
20.312005


96
%

$
20.072004


81
%

$
16.472003


82
%

$
16.892002


82
%

$
16.80     (1)
    
    The information in this chart for the periods prior to our
    predecessors acquisition of the Foothills Mall in April
    2002 was supplied by or derived from information provided by the
    previous owner of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Colonie
    Center
  Overview
          Joint
    Venture with Heitman
   42




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##### Table of Contents



Recent
    Developments At Colonie Center
            Anchor
    Tenant Sales Versus Shop Tenant Sales
      Financing
   43




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##### Table of Contents



Renovation
    and Repositioning Plan
    
    Redirecting Anchor Tenant Traffic.  We will
    improve the appearance and ambiance of the mall by undertaking
    major renovations of the interior common areas and the mall
    entrances. The objective with respect to this renovation will be
    to create a unique series of indoor mall features that will
    attract the already very high volume of anchor tenant shoppers
    to come into the main mall corridors. Final architectural
    drawings have been completed and renovations have commenced.
    These designs include a large indoor aquarium or series of
    aquariums, television viewing areas with high-end Adirondack
    themed living rooms within the mall, including a stone clad fire
    place area, fountain area, comfortable leather sofa seating and
    areas, television viewing areas with modern full size flat
    screen televisions and a large scale, high-end childrens
    play area featuring an innovative climbing apparatus. In
    addition, indoor and outdoor restaurant seating will be
    encouraged throughout the mall, with café style seating
    overlooking the mall corridors.
    Appearance.  We intend to improve the
    appearance of the mall by undertaking major renovations of the
    interior common areas and the mall entrances
    New Pylon Signage and Improved Mall
    Signage.  Given the significant automobile traffic
    and visitor activity on Wolf Road and the immediate interstate
    access, every effort will be made to add significantly upgraded
    signage, including a new pylon sign.    Location
    and Demographics
    
    Population.  The Albany metropolitan
    statistical area population within a
    20-mile
    radius of Colonie Center is approximately 875,000 according to
    the US Census Bureau 2000.
    Population Growth.  The population within a
    15-mile
    radius of Colonie Center is estimated to have grown by
    approximately 2.4% from 2000 to 2006 and is projected to grow by
    2.0% from 2006 to 2011 according to Claritas.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of the Colonie Center was estimated to be $64,688
    according to Claritas.
    Local Market Characteristics.  The Albany
    region is home to a growing state government workforce, which
    tends to insulate the region from major economic downturns. In
    the next decade, the number of government employees is expected
    to increase, due to fiscal stimulus packages, which will have a
    positive impact on the Albany area. In addition, the region is
    home to 21 colleges with over 65,000 students. This student
    population and stable government workforce provides a steady
    pool of consumers for area retailers. 44




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##### Table of Contents



Competition
    
    Crossgates Mall.  The Crossgates Mall, located
    three miles south on Interstate 87, is Colonie Centers
    closest and strongest competitor. The property was originally
    built in 1984 and underwent a renovation in 1994. It is the
    largest mall in the Albany region with over 1.6 million
    square feet and is anchored by Cohoes, Filenes, H&M,
    JCPenney, Lord & Taylor and Macys. Other tenants
    in the mall include Best Buy, DSW Shoe Warehouse, a 30-screen
    Hoyts Cinemas, The Gap, Hollister, Pottery Barn and
    Williams-Sonoma. This mall has a large food court and much of
    its tenant mix is targeted toward teenagers.
    Latham Circle Mall.  The Latham Circle Mall is
    located four miles northeast of Colonie Center. The property was
    built in 1957 and renovated in 1994 and contains
    677,000 square feet. It is anchored by Burlington Coat
    Factory, JCPenney, Kleins and includes other major
    retailers such as Baby Depot and Malt River Brewing Company.
    Clifton Park Center.  Clifton Park Center is an
    875,000 square-foot regional mall located 15 miles
    northwest of Colonie Center. The property was constructed in
    1976 and was renovated in 2001. It is anchored by Boscovs,
    JCPenney and Mega Marshalls and includes a food court, day
    spa and a six-screen Hoyts Cinemas.  Average
    Occupancy Rate and Base Rent  Colonie
    Center(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


77
%

$
25.482005


73
%

$
21.002004


72
%

$
16.532003


73
%

$
20.362002


76
%

$
21.84     (1)
    
    The information in this chart prior to our acquisition in
    February 2005 was supplied by or derived from information
    provided by the seller of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Harrisburg
    Mall
  Overview
     45




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##### Table of Contents



Renovation
    and Repositioning
      
    Anchors and Key Renewals.  Our predecessor
    signed two new long-term leases and renewed a third lease with
    proven high traffic anchor tenants. Bass Pro Shops occupies a
    200,000 square-foot super store consisting of fishing,
    hunting and boating products. Our predecessor also signed a
    long-term lease with Boscovs, a regional discount
    department store chain with 41 stores and annual sales in excess
    of $1 billion. In addition, the May Company, which recently
    merged with Federated Department Stores, a national department
    store chain with annual sales in excess of $22.4 billion,
    renewed its long-term lease through the year 2024. All three
    anchor tenants have agreed to operate their stores continuously
    for an extended period.
    Entertainment.  We are focusing a significant
    portion of our leasing efforts towards leasing to tenants that
    are entertainment and tourist destinations, such as Bass Pro
    Shops and a movie theater. The Bass Pro Shops store opened on
    November 18, 2004 and is our most important anchor tenant
    in the Harrisburg Mall, serving both as a retailer and as an
    entertainment destination. At approximately 200,000 square
    feet, the Bass Pro Shops Harrisburg store is the second largest
    Bass Pro Shops store in the nation and features a 60,000-gallon
    aquarium, rock climbing walls, a live trout stream, waterfalls
    and an indoor archery range. According to the Springfield,
    Missouri Visitors and Convention Bureau, the Bass Pro Shops
    store in Springfield, Missouri, the chains flagship store,
    is the number one tourist destination in the State of Missouri.
    Including the Harrisburg Mall store, Bass Pro Shops currently
    has 26 stores across the United States and Canada and attracts
    over 66 million visitors annually. During 2006, a lease was
    signed with the Great Escape movie theater chain to build a
    14-screen state of the art stadium seated movie theater. As of
    March 2007, construction of the theater is nearly 40% complete
    and is expected to be completed by the fourth quarter of 2007.
    Accessibility.  We improved the malls
    access by arranging for the Pennsylvania Department of
    Transportation to provide a direct exit ramp to the property
    from Interstate 83.
    Appearance.  We are improving the appearance of
    the mall by undertaking major renovations of the interior of the
    two new anchor stores, the interior and exterior of the mall and
    mall entrances.
    Signage.  We have improved visibility of the
    mall by adding significantly upgraded signage, including a
    150-foot pylon sign which is visible from Interstate 83 and
    nearby local roads. In addition, we have installed a digital
    color video screen at the entrance to the mall. The digital
    color video screen is programmable from a computer inside our
    mall management office and will be available to notify the
    public about special events and other mall promotions. Working
    in collaboration with local officials, our predecessor succeeded
    in adding Bass Pro Drive to the name of a nearby
    local street, which will allow us to identify the retailer on
    multiple sign locations along Interstate 83.
    Lighting and Security.  We have improved
    lighting and security by installing brighter energy-efficient
    lighting and increasing security in parking lots with regular
    patrols.
    Heating, Ventilation and Air Conditioning.  We
    are reducing operating expenses by replacing the main air
    conditioning central plant with new modern energy efficient
    units that we estimate will result in a significant reduction in
    the cost of energy. 46




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##### Table of Contents



Joint
    Venture and Financing
               47




---



##### Table of Contents



Location
    and demographics
    
    Population.  The Harrisburg metropolitan
    statistical area population was 629,401 according to the US
    Census Bureau Census 2000.
    Population Growth.  The population within a
    15-mile
    radius of the Harrisburg Mall is estimated to have grown by
    approximately 3.7% from 2000 to 2006 and is projected to grow by
    2.9% from 2006 to 2011, according to Claritas.
    Household Income.  For the year ended
    December 31, 2006, the average household income within a
    15-mile
    radius of the Harrisburg Mall was estimated to be $78,510
    according to Claritas.
    Local Market Characteristics.  The Harrisburg
    regions economy is dominated by State and Federal
    Government, which tends to insulate the region from major
    economic downturns in the national economy. The Harrisburg Mall
    is located within a 10 minute drive from the city of Hershey and
    Hershey Park, which is a national tourist destination.  Competition
  10-mile
  
    Colonial Park Mall.  The Colonial Park Mall
    opened in 1960 and is located approximately five miles north of
    the Harrisburg Mall. It contains approximately
    745,000 square feet of leasable area, 95 shops and is
    anchored by Bon Ton, Sears and Boscovs. This center
    was renovated and expanded with a food court and some specialty
    shops during 1990.
    Capital City Mall.  The Capital City Mall is
    located 10 miles to the west of the Harrisburg Mall. It
    contains approximately 600,000 square feet of leasable area
    and 94 shops. This center opened in 1974 and is anchored by
    Hechts, JCPenney and Sears. The center was first renovated
    in 1986 and a second renovation was completed in 1998, which
    included new flooring, plantings, seating, skylights and a food
    court area.
    The Shoppes at Susquehanna.  The Shoppes at
    Susquehanna is a 108,000 square-foot, open-air lifestyle
    center that opened in October 2004. It is approximately four
    miles from the Harrisburg Mall and is approximately 63% leased
    to such tenants as Ann Taylor Loft, Childrens Place,
    Coldwater Creek, J. Jill, Jos. A Banks and Williams-Sonoma. This
    center has dining establishments including Damons and
    Macaroni Grill. 48




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##### Table of Contents



Average
    Occupancy Rate and Base Rent  Harrisburg
    Mall(1)
  Average


Average AnnualFiscal Year

Occupancy Rate(2)(3)


Rent per Sq. Ft.(3)2006


63
%

$
22.882005


65
%

$
18.362004


65
%

$
17.702003


70
%

$
15.402002


81
%

$
13.42     (1)
    
    The information in this chart for the periods prior to our
    predecessors investment in the Harrisburg Mall in
    September 2003 was supplied by or derived from information
    provided by the previous owner of the property.(2)
    
    Excludes temporary leases, which are leases for a term of less
    than one year.(3)
    
    Calculated based on rentable shop tenant space.  Regulation
            Environmental
    Matters
  and/or and/or
 49




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##### Table of Contents



and/or
  Insurance
    ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   50




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    2006


2005Quarter Ended

High


Low


Dividends


High


Low


DividendsMarch 31

$
12.85


$
11.03


$
0.2275


$
13.05


$
12.00


$
0.2671
(1)June 30


12.49



10.30



0.2275



14.10



11.65



0.2275September 30


11.40



10.24



0.2275



14.65



12.95



0.2275December 31


12.60



10.10



0.2275



13.48



8.63



0.2275     (1)
    
    The declared dividend was $0.2671 per common share for the
    period December 16, 2004 to March 31, 2005. The figure
    in the above table reflects the Companys intention at the
    time to have a dividend of $0.2275 per quarter with two parts:
    $0.0396 for the period of December 16, 2004 through
    December 31, 2004 and $0.2275 for the period of
    January 1, 2005 through March 31, 2005.          (c)Number of SecuritiesRemaining Available for(a)


(b)


Future Issuance UnderNumber of Securities to


Weighted Average


Equity Compensationbe Issued Upon Exercise


Exercise Price of


Plans (Excludingof Outstanding Options,


Outstanding Options,


Securities Reflected inPlan Category

Warrants and Rights


Warrants and Rights


Column (a))Equity compensation plans approved
    by security holders(1)


N/A
(1)


N/A



82,429Equity compensation plans not
    approved by security holders










Total


N/A
(1)


N/A



82,429     (1)
    
    Includes information related to our 2004 Equity Incentive Plan
    and 2004 Incentive Bonus Plan. As of December 31, 2006, the
    Company has issued 386,792 shares of restricted common
    stock, net of forfeitures.  Sale of
    Registered and Unregistered Securities
   51




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA    The Company


Our PredecessorApril 1, 2002December 16 to


January 1 to


Year Ended


(Inception) toYear Ended December 31,


December 31,


December 15,


December 31,


December 31,2006


2005


2004


2004


2003


2002(Amounts in thousands, except per share data)Statement of Operations
    Data:Revenue:Rental

$
41,104


$
35,729


$
327


$
6,340


$
6,720


$
4,881Tenant reimbursements


19,867



17,634



193



4,124



4,446



3,385Management, leasing and development
    services


1,310



470



58



917



461



248Interest and other income


3,024



1,362



52



250



67



51Total revenue


65,305



55,195



630



11,631



11,694



8,565Expenses:Rental property operating and
    maintenance


21,014



18,383



329



3,886



4,193



2,950Real estate taxes


7,645



6,520



45



1,218



1,225



1,017Interest (including the
    amortization of deferred financing costs)


16,435



11,909



443



4,007



4,904



3,264Loss from early extinguishment of
    debt


357







300











Depreciation and amortization


17,394



13,383



211



1,462



1,442



964General and administrative


8,657



7,511



747



3,498



833



1,467Total expenses


71,502



57,706



2,075



14,071



12,597



9,662Loss from operations


(6,197
)


(2,511
)


(1,445
)


(2,440
)


(903
)


(1,097
)Equity in (losses) earnings of
    unconsolidated real estate partnerships


(550
)


(454
)


12



425



197



Gain on partial sale of real estate


29,397



















Income (loss) before minority
    interest


22,650



(2,965
)


(1,433
)


(2,015
)


(706
)


(1,097
)Minority interest


(2,469
)


332



184



(233
)


(30
)


(107
)Net income (loss)

$
20,181


$
(2,633
)

$
(1,249
)

$
(2,248
)

$
(736
)

$
(1,204
)Basic earnings (loss) per share

$
1.58


$
(0.21
)

$
(0.12
)


N/A



N/A



N/ADiluted earnings (loss) per share


1.54



(0.21
)


(0.12
)


N/A



N/A



N/AWeighted average common shares
    outstanding:Basic


12,808



12,363



10,790



N/A



N/A



N/ADiluted


14,666



12,363



10,790



N/A



N/A



N/A   52




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##### Table of Contents



The Company


Our Predecessor2006


2005


2004


2003


2002Balance Sheet Data (at end of
    period)Investments in real estate, net

$
318,440


$
396,108


$
143,653


$
50,473


$
48,729Total assets


413,851



475,485



188,783



70,776



58,271Mortgages and other loans payable


240,831



318,489



54,750



61,278



46,528Total liabilities


288,657



358,407



80,290



69,923



54,680Minority interest


11,649



12,117



13,962



762



2,764Stockholders/owners
    equity


113,545



104,961



94,531



91



827Total liabilities and
    stockholders/owners equity


413,851



475,485



188,783



70,776



58,271Other Data (for the year
    ended)Net cash flows provided by (used
    in):Operating activities


381



11,605



945



758



514Investing activities


(14,372
)


(139,401
)


(102,530
)


(6,644
)


(54,531
)Financing activities


12,696



126,520



113,215



9,517



54,363   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
           53




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##### Table of Contents




    In January 2005, we completed a $75.0 million, three-year
    first mortgage financing collateralized by the Stratford Square
    Mall. The mortgage bears interest at the London Interbank
    Offered Rate (LIBOR) plus 125 basis points and
    has two options for one-year extensions. In connection with the
    Stratford Square Mall financing, during January 2005, we entered
    into a $75.0 million interest rate swap commencing February
    2005 with an all-in rate of 5.0% and a final maturity date in
    January 2008, which effectively fixed the interest rate on the
    Stratford Square Mall mortgage loan through that maturity date.
    On February 1, 2005, we acquired Colonie Center Mall
    located in Albany, New York for an initial purchase price of
    $82.2 million and funded the purchase price of this
    acquisition using the net proceeds from a property-level
    financing of the Stratford Square Mall. We paid additional
    consideration of $2.4 million in connection with the
    execution of certain leases. At December 31, 2006, shop
    occupancy at the Colonie Center Mall, excluding temporary
    tenants, was 78.0%.
    On June 28, 2005, we acquired the Tallahassee Mall, a
    966,000 square-foot mall located in Tallahassee, the state
    capital of Florida. The purchase price of $61.5 million
    included the assumption of the existing mortgage loan of
    approximately $45.8 million plus cash in the amount of
    approximately $16.2 million. The first mortgage we assumed
    bears interest at a fixed rate of 8.60% and has a July 2009
    anticipated prepayment date. The property is subject to a
    long-term ground lease that expires in the year 2063 (assuming
    the exercise of all extension options). The ground lease does
    not contain a purchase option. At December 31, 2006, shop
    occupancy, excluding temporary and anchor tenants, was 79.0%.
    On July 12, 2005, we acquired Northgate Mall, a
    1.1 million square-foot mall located in the northwest
    suburbs of Cincinnati, Ohio. The purchase price of
    $110.0 million included the assumption of the existing
    mortgage loan in the amount of approximately $79.6 million
    plus cash in the amount of approximately $30.4 million. The
    first mortgage we assumed bears interest at a fixed rate of
    6.60% and has an anticipated prepayment date in November 2012.
    At December 31, 2006, shop occupancy, excluding temporary
    and anchor tenants, was 89.4%.
    During March 2006, we completed the issuance and sale in a
    private placement of $29.4 million in aggregate principal
    amount of junior subordinated debt obligations (the
    Notes). The Notes require quarterly interest
    payments calculated at a fixed interest rate equal to 8.70% per
    annum through April 2011 and subsequently at a variable interest
    rate equal to LIBOR plus 3.45% per annum. The Notes mature in
    April 2036 and may be redeemed, in whole or in part, at par, at
    our option, beginning after April 2011.
    On April 5, 2006, we acquired the Golden Triangle Mall in
    the Dallas suburb of Denton, Texas, for approximately
    $42.3 million (including $2.1 million of additional
    consideration accrued in accordance with an earn-out provision
    in the purchase agreement). Including non-owned anchors, the
    Golden Triangle Mall is a 765,000 square-foot regional
    mall. At December 31, 2006, excluding temporary tenants,
    the malls occupancy was 66.0%.
    On April 5, 2006, in connection with the acquisition of the
    Golden Triangle Mall, we entered into a $24.6 million
    secured line of credit which bears interest at 140 basis
    points over LIBOR and matures in April 2008. The secured line of
    credit was fully drawn on the date we acquired the Golden
    Triangle Mall. The secured line of credit contains certain
    financial covenants requiring us to, among other requirements,
    maintain certain financial coverage ratios. The secured line of
    credit was increased to $30.0 million in April 2007 and the
    maturity date was extended to April 2009. As of
    December 31, 2006, there was no outstanding balance on this
    line of credit.
    On April 7, 2006, we acquired the building occupied by JCPenney
    and related acreage at Stratford Square Mall for a price of
    $6.7 million. The purchase price included assumption of a
    loan secured by the property that had a principal balance of
    approximately $3.5 million. The loan is self amortizing,
    bears interest at a 5.15% fixed rate and matures in November
    2013. 54




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##### Table of Contents




    On June 29, 2006, we contributed the Foothills Mall to a
    joint venture and retained a 30.8% interest. In connection with
    this transaction, the joint venture refinanced the existing
    $54.8 million first mortgage with an $81.0 million
    first mortgage. As a result of these transactions, we received a
    distribution of approximately $38.9 million and recognized
    a $29.4 million gain on the partial sale of the property as
    reported on the consolidated statement of operations. A portion
    of the proceeds from the transaction was used to repay
    $24.6 million outstanding on our secured line of credit and
    $5.0 million outstanding to extinguish our credit facility
    provided by Kimco Realty Corp.
    On September 29, 2006, we contributed the Colonie Center
    Mall to a joint venture and retained a 25% interest. In
    connection with this transaction, the joint venture refinanced
    the existing $50.8 million first mortgage bridge loan with
    a first mortgage and construction facility with a maximum
    capacity commitment of $109.8 million. As a result of these
    transactions, we received a distribution of approximately
    $41.2 million and recorded a $3.5 million deferred
    gain. A portion of the proceeds from the transaction were used
    to repay $4.0 million outstanding on our secured line of
    credit on October 2, 2006.
    Effective April 10, 2007, we entered into an agreement 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. We issued $15 million in preferred stock on
    April 30, 2007. We are required to issue a total of
    $50 million by the end of the
    12-month
    period following the close of this transaction.
    On April 16, 2007, we announced the execution of 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 and will bear
    interest at the rate of 7.0% 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 we deliver to Kimco, on or
    before March 17, 2008, a notice of extension and further
    provided that we comply with certain performance criteria. We
    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 our 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, we will instead pay to Kimco
    $250,000 in additional interest.  Critical
    Accounting Policies
  Form 10-K,
  Revenue
    Recognition
     55




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##### Table of Contents



Principles
    of Consolidation and Equity Method of Accounting
    Consolidation of Variable Interest
    Entities
  04-05, EITF 04-05 states
  The
    Equity Method of Accounting for Investments in Common Stock,
 56




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##### Table of Contents



No. 78-9  Accounting for Investments in Real Estate Ventures (SOP 78-9) EITF 04-05.
      Investments
    in Real Estate and Real Estate Entities
        Accounting for the
    Impairment of Long-Lived Assets and for Long-Lived Assets to be
    Disposed Of property-by-property
      Gains
    on Disposition of Real Estate
   57




---



##### Table of Contents



Purchase
    Price Allocation
  Business Combinations
      lease-up lease-up
  Depreciation
    Derivative
    Instruments
   58




---



##### Table of Contents



Results
    of Operations
  Overview
      Comparison
    of the Year Ended December 31, 2006 to the Year Ended
    December 31, 2005
  Revenue
     59




---



##### Table of Contents



Expenses
            Other
     60




---



##### Table of Contents



Principles of
    Consolidation and Equity Method of Accounting.
      Comparison
    for the Year Ended December 31, 2005 to the Year Ended
    December 31, 2004
  Revenue
          Expenses
         61




---



##### Table of Contents



Cash
    Flows
  Comparison
    of the year ended December 31, 2006 to the year ended
    December 31, 2005
         62




---



##### Table of Contents



Comparison
    of the year ended December 31, 2005 to the year ended
    December 31, 2004
          Liquidity
    and Capital Resources
        Short-Term
    Liquidity Requirements
   63




---



##### Table of Contents



Secured
    Line of Credit
   64




---



##### Table of Contents



Convertible
    Preferred Equity Financing
  12-month
    $25
    Million Credit Facility
  five-day
    $104.5
    Million Stratford Square Refinancing
    Long-Term Liquidity Requirements
  Long-Term
    Liquidity Requirements
   65




---



##### Table of Contents



and/or
      Contractual
    Obligations
    Our Share of





Our Share ofCapital Expenditure





Long-TermConsolidated


Commitments in


Consolidated


Debt inCapital Expenditure


Unconsolidated


Long-Term


Unconsolidated


Operating andYear

Commitments


Joint Ventures


Debt(1)


Joint Ventures(1)


Ground Leases


Total2007

$
35,800


$
18,124


$
17,533


$
3,252


$
605


$
75,3142008






1,483



88,782



27,550



578



118,3932009










53,254



1,517



510



55,2812010










9,313



1,517



429



11,2592011










10,676



1,640



331



12,6472012 and thereafter










167,433



31,650



23,571



222,654Total

$
35,800


$
19,607


$
346,991


$
67,126


$
26,024


$
495,548     (1)
    
    Amounts include interest payments based on contractual terms and
    current interest rates for variable rate debt.  Mortgage
    Loans
  Northgate
    Mall
    Tallahassee
    Mall
   66




---



##### Table of Contents



Stratford
    Square Mall
    Colonie
    Center Mall Joint Venture
      Foothills
    Mall Joint Venture
  30-year
  Harrisburg
    Mall Joint Venture
      Short-Term
    Liquidity Requirements
  Capital
    Expenditures
   67




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##### Table of Contents



Off-Balance
    Sheet Arrangements
  Loan
    Guarantees
    Forward
    Swap Contracts
      Tax
    Indemnifications
      Funds
    From Operations
   68




---



##### Table of Contents



For the PeriodDecember 16,Year Ended


2004 toDecember 31,


December 31,2006


2005


2004Net income (loss)

$
20,181


$
(2,633
)

$
(1,249
)Add:Depreciation and amortization
    (excluding depreciation of non-real estate furniture and
    fixtures)


17,114



13,136



201FFO contribution from
    unconsolidated joint ventures


1,377



729



76Less:Minority interest


2,469



(332
)


(184
)Gain on partial sale of property


(29,397
)






Funds From Operations available to
    common stockholders and OP Unit holders

$
11,744


$
10,900


$
(1,156
)   ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Market
    Risk Related to Fixed Rate Debt
        Inflation
   69




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##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTAL DATA  FELDMAN
    MALL PROPERTIES, INC.
  INDEX TO
    FINANCIAL STATEMENTS
  Feldman
    Mall Properties, Inc. and Subsidiaries and Feldman Equities of
    Arizona, LLC and Subsidiaries
    (Predecessor)
  PageReport of
    Independent Registered Public Accounting Firm


71Consolidated
    Balance Sheets as of December 31, 2006 and 2005


72Consolidated
    Statements of Operations for the years ended December 31,
    2006 and 2005, the period December 16, 2004 to
    December 31, 2004 and the period January 1, 2004 to
    December 15, 2004


73Consolidated
    Statements of Stockholders/Owners Equity (Deficit)
    and Comprehensive Income (Loss) for the years ended
    December 31, 2006 and 2005, the period December 16,
    2004 to December 31, 2004 and the period January 1,
    2004 to December 15, 2004


74Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005 and 2004


75Notes to
    Consolidated Financial Statements


77Feldman Lubert Adler Harrisburg
    LP:Independent
    Auditors Report


106Balance Sheets as
    of December 31, 2006 (unaudited) and 2005


107Statements of
    Operations for the years ended December 31, 2006
    (unaudited), 2005 and 2004


108Statements of
    Partners Capital for the years ended December 31,
    2006 (unaudited), 2005 and 2004


109Statements of Cash
    Flows for the years ended December 31, 2006 (unaudited),
    2005 and 2004


110Notes to Financial
    Statements


111  70




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                 71




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS

(Amounts in thousands, except per share data)  December 31,2006


2005ASSETS:Investments in real estate, net

$
318,440


$
396,108Investments in unconsolidated real
    estate partnerships


32,833



3,153Cash and cash equivalents


13,036



14,331Restricted cash


8,159



7,707Rents, deferred rents and other
    receivables, net


5,718



5,763Acquired below-market ground
    lease, net


7,674



7,811Acquired lease rights, net


9,262



14,205Acquired in-place lease values, net


10,049



19,098Deferred charges, net


3,284



2,843Other assets, net


5,396



4,466Total Assets

$
413,851


$
475,485LIABILITIES AND
    STOCKHOLDERS EQUITY:Mortgage loans payable

$
211,451


$
318,489Junior subordinated debt
    obligations


29,380



Due to affiliates


3,891



5,303Accounts payable, accrued expenses
    and other liabilities


25,832



19,672Dividends and distributions payable


3,315



3,331Acquired lease obligations, net


6,823



11,612Deferred gain on partial sale of
    real estate


3,515



Negative carrying value of
    investment in unconsolidated partnership


4,450



Total liabilities


288,657



358,407Minority interest


11,649



12,117Commitments and contingencies
    (note 14)Stockholders
    EquityCommon 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



131Additional paid-in capital


120,163



119,643Distributions in excess of earnings


(7,637
)


(15,912
)Accumulated other comprehensive
    income


887



1,099Total stockholders equity


113,545



104,961Total Liabilities and
    Stockholders Equity

$
413,851


$
475,485    72




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES OF
    
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)  Company


The PredecessorPeriod from


Period fromDecember 16,


January 1,Year Ended


Year Ended


2004 to


2004 toDecember 31,


December 31,


December 31,


December 15,2006


2005


2004


2004Revenue:Rental

$
41,104


$
35,729


$
327


$
6,340Tenant reimbursements


19,867



17,634



193



4,124Management, leasing and
    development services


1,310



470



58



917Interest and other income


3,024



1,362



52



250Total revenue


65,305



55,195



630



11,631Expenses:Rental property operating and
    maintenance


21,014



18,383



329



3,886Real estate taxes


7,645



6,520



45



1,218Interest (including amortization
    of deferred financing costs)


16,435



11,909



443



4,007Loss on early extinguishment of
    debt


357







300



Depreciation and amortization


17,394



13,383



211



1,462General and administrative


8,657



7,511



747



3,498Total expenses


71,502



57,706



2,075



14,071Loss from operations


(6,197
)


(2,511
)


(1,445
)


(2,440
)Equity in (losses) earnings of
    unconsolidated real estate partnerships


(550
)


(454
)


12



425Gain on partial sale of real estate


29,397











Income (loss) before minority
    interest


22,650



(2,965
)


(1,433
)


(2,015
)Minority interest


(2,469
)


332



184



(233
)Net income (loss)

$
20,181


$
(2,633
)

$
(1,249
)

$
(2,248
)Basic earnings (loss) per share

$
1.58


$
(0.21
)

$
(0.12
)


N/ADiluted earnings (loss) per share

$
1.54


$
(0.21
)

$
(0.12
)


N/AWeighted average common shares
    outstanding:Basic


12,808



12,363



10,790



N/ADiluted


14,666



12,363



10,790



N/A    73




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS/OWNERS
    EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands, except share and per share data)  AccumulatedNumber of








Distributions


Owners


Other





ComprehensiveCommon


Common


Additional Paid-In


in Excess


Equity


Comprehensive





IncomeShares


Stock


Capital


of Earnings


(Deficit)


Income


Total


(Loss)The
    PredecessorBalance at December 31, 2003

















$
91






$
91



Distribution  paid


















(451
)






(451
)


Distribution  accrued


















(4,000
)






(4,000
)


Contribution


















100







100



Adjustment for the fair value of
    ownership interests issued


















1,980







1,980



Net loss


















(2,248
)






(2,248
)


Balance at December 15, 2004


















(4,528
)






(4,528
)


The CompanyReclassify predecessor owners
    deficit









$
(4,528
)






4,528











Net proceeds from sale of initial
    public offering common stock


10,666,667


$
107



128,923















129,030



Costs associated with initial
    public offering










(4,488
)














(4,488
)


Contribution of the net assets of
    the predecessor in exchange for fully vested common stock


123,228



1



1,601















1,602



Record net obligations due to
    predecessor










(11,690
)














(11,690
)


Record minority interest for former
    owners continuing interest










(14,146
)














(14,146
)


Net loss













$
(1,249
)










(1,249
)


Balance at December 31, 2004


10,789,895



108



95,672



(1,249
)










94,531



Proceeds from offering of common
    stock


1,600,000



16



20,784















20,800



Common stock issued to independent
    directors


6,000







77















77



Costs associated with offering










(1,543
)














(1,543
)


Net loss














(2,633
)










(2,633
)

$
(2,633
)Unrealized gain on derivative
    instruments, net of $58 recorded as interest expense





















$
1,099



1,099



1,099Deferred compensation plan and
    stock awards


285,100



3



(3
)


















Unregistered common stock issuance


369,375



4



4,207















4,211



Share-based compensation expense










449















449



Dividends(1)














(12,030
)










(12,030
)


Balance at December 31, 2005


13,050,370



131



119,643



(15,912
)






1,099



104,961


$
(1,534
)Net income














20,181











20,181



20,181Common stock issued to outside
    directors


3,000







35















35



Repurchase of OP Units in excess of
    book value










(216
)














(216
)


Unrealized loss on derivative
    instruments, net of $11 recorded in interest expense






















(212
)


(212
)


(212
)Deferred compensation plan and
    stock awards


101,692



1



















1



Share-based compensation expense










701















701



Dividends on forfeited nonvested
    stock














32











32



Dividends(2)














(11,938
)










(11,938
)


Balance at December 31, 2006


13,155,062


$
132


$
120,163


$
(7,637
)

$



$
887


$
113,545


$
19,969     (1)
    
    Declared $0.9496 per common share
    of which $0.4241 per common share represented a return of
    capital for federal income tax purposes.(2)
    
    Declared $0.9100 per common share,
    all of which represented a return of capital for federal income
    tax purposes.   74




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)
  The Company andPredecessorThe Company


Year EndedYear Ended December 31,


December 31,2006


2005


2004Cash Flows From Operating
    Activities:Net income (loss)

$
20,181


$
(2,633
)

$
(3,497
)Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Gain on partial sale of real estate


(29,397
)






Loss on early extinguishment of debt


357







Depreciation and amortization


17,394



13,383



1,673Amortization of deferred financing
    costs


858



628



458Provision for doubtful accounts
    receivable


843



584



128Amortization of ground rent


358



68



Noncash stock compensation


701



526



1,980Minority interest


2,469



(332
)


49Interest expense (accretion)
    amortization, net


(3,243
)


(1,377
)


Equity in losses (earnings) of
    unconsolidated real estate partnerships


550



454



(437
)Deferred tax benefit


(190
)






Other noncash income


(1,375
)






Net change in revenue related to
    acquired lease rights/obligations


(240
)


(734
)


142Changes in operating assets and
    liabilities:Rents, deferred rents and other
    receivables


(2,883
)


(4,508
)


(809
)Restricted cash related to
    operating activities


(335
)


(1,607
)


(142
)Other deferred charges


(1,394
)


(3,416
)


(257
)Other assets, net


(3,130
)


371



(324
)Accounts payable, accrued expenses
    and other liabilities


(1,143
)


10,198



1,981Net cash provided by operating
    activities


381



11,605



945Cash Flows From Investing
    Activities:Proceeds from partial sales of real
    estate, net


80,319







Distribution from (investment in)
    unconsolidated real estate partnerships


(13,894
)


1,625



(905
)Real estate acquisition deposit










(1,000
)Expenditures for real estate
    improvements


(34,934
)


(6,584
)


(8,625
)Real estate acquisitions, net of
    assumed liabilities


(43,235
)


(132,971
)


(91,183
)Acquisition of minority interest


(1,570
)






(4,500
)Other


(880
)






Change in restricted cash relating
    to investing activities


(178
)


(1,471
)


3,683Net cash used in investing
    activities


(14,372
)


(139,401
)


(102,530
)Cash Flows From Financing
    Activities:Proceeds from junior subordinated
    debt obligations


29,380







Proceeds from lines of credit


28,600







5,922Repayment of lines of credit


(28,600
)






(6,000
)Proceeds from equity offering (net
    of underwriters fees)






20,800



129,030Payment of offering costs






(3,754
)


(2,277
)Proceeds from mortgages and notes
    payable


10,000



125,766



Repayment of mortgages and notes
    payable


(11,781
)


(624
)


(6,450
)Increase in due to affiliates






102



603Payments to affiliates






(7,996
)


(7,700
)Change in restricted cash relating
    to financing activities


31



3,626



(13
)Payment of deferred financing costs


(1,571
)


(1,129
)


Capital contributions










551Unrealized loss on derivative






(59
)


Distributions and dividends


(13,363
)


(10,212
)


Distributions to members of
    Predecessor










(451
)Net cash provided by financing
    activities


12,696



126,520



113,215Net change in cash and cash
    equivalents


(1,295
)


(1,276
)


11,630Cash and cash equivalents,
    beginning of year


14,331



15,607



3,977Cash and cash equivalents, end of
    year

$
13,036


$
14,331


$
15,607 75




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amounts in thousands)
  The Company andPredecessorThe Company


Year EndedYear Ended December 31,


December 31,2006


2005


2004Supplemental disclosures of cash
    flow information:Cash paid during the period for
    interest, net of amounts capitalized

$
19,755


$
12,253


$
3,602Supplemental disclosures of noncash
    investing and financing activities:Accrued renovation costs

$
7,576







Accrued additional purchase
    consideration


2,051







Unpaid initial public offering costs










2,211Issuance of common stock to
    predecessor










1,602Record obligations due predecessor
    owners










15,690Record minority interest for
    limited partnership units in the operating partnership by
    reclassifying from additional paid in capital


216







14,170Reclassification of owners
    deficit to additional paid in capital










4,528Assets acquired in connection with
    real estate acquisition


19



4,338



Liabilities assumed in connection
    with real estate acquisition


3,699



128,976



2,182Unrealized (loss) gain on
    derivative instruments


(212
)


1,157



Dividends and distributions payable


3,315



3,331



Issuance of common stock relating
    to lease buyout






4,211



Contribution of property to joint
    ventures:Investments in real estate, net

$
134,240







Other assets


13,722







Mortgage loans


(105,516
)






Liabilities


(4,370
)






Net assets

$
38,076







    76




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    DECEMBER 31, 2006
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)  1.
    Organization
    and Description of Business              2.
    Summary
    of Significant Accounting Policies  Basis
    of Accounting
   77




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  Principles
    of Consolidation and Equity Method of Accounting
      Consolidation of Variable Interest Entities
  04-05, EITF 04-05 states
  The
    Equity Method of Accounting for Investments in Common Stock
  No. 78-9, Accounting for Investments in Real Estate Ventures (SOP 78-9) EITF 04-05.
 78




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
      Gains
    on Disposition of Real Estate
      Critical
    Accounting Policies and Managements
    Estimates
           79




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
      Cash
    and Cash Equivalents
    Restricted
    Cash
    Revenue
    Recognition and Tenant Receivables
    case-by-case
   80




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
        Balance at December 31, 2003

$
286Provision


128Balance at December 31, 2004


414Provision


584Balance at December 31, 2005


998Provision


843Write-offs


(188
)Recoveries


187Contributions of properties to
    joint ventures


(752
)Balance at December 31, 2006

$
1,088   Deferred
    Charges
      Issuance
    Costs
   81




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  Investments
    in Real Estate and Depreciation
      Year Ended December 31,2006


2005


2004Interest

$
727


$
34


$
132Real estate taxes


445



37



Insurance


46







Total

$
1,218


$
71


$
132           Conditional
    Asset Retirement Obligations
  catch-up
 82




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  Impairment
    of Long-Lived Assets
  Accounting for the
    Impairment of Long-Lived Assets and for Long-Lived Assets to be
    Disposed Of property-by-property
  Derivative
    Instruments
          Purchase
    Accounting for Acquisition of Interests in Real Estate
    Entities
  Business Combinations
 83




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  lease-up lease-up
           84




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
    GoldenNorthgate(1)


Tallahassee(2)


Colonie(B)


Stratford(3)


Triangle(4)Land

$
11,120


$

(A)

$
9,045


$
11,528


$
9,198Building and improvements


98,223



64,775



71,507



74,547



30,473Below-market ground lease






7,879











Acquired lease rights


7,839



1,215



3,687



3,380



992In-place lease values


2,701



4,358



2,845



7,262



791Acquired lease obligations


(1,306
)


(10,109
)


(3,439
)


(3,352
)


(1,254
)Assumed above-market mortgages


(8,243
)


(6,533
)










Total purchase price

$
110,334


$
61,585


$
83,645


$
93,365


$
40,200     (A)
    
     The Tallahassee Mall is subject to an operating
    ground lease.(B)
    
     Acquired February 2005; the property was
    subsequently contributed to a joint venture in September 2006.(1)
    
    The Northgate Mall acquired lease rights, lease obligations and
    in-place lease values are being amortized over the remaining
    lease terms and the remaining weighted average amortization
    expense periods as of December 31, 2006 are 3.8 years,
    2.0 years and 3.6 years, respectively.(2)
    
    The Tallahassee Mall acquired lease rights, lease obligations
    and in-place lease values are being amortized over the remaining
    lease terms and the remaining weighted average amortization
    expense periods as of December 31, 2006 are 2.8 years,
    5.4 years and 2.8 years, respectively.(3)
    
    The Stratford Square Mall acquired lease rights, lease
    obligations and in-place lease values are being amortized over
    the remaining lease terms and the remaining weighted average
    amortization expense periods as of December 31, 2006 are
    3.5 years, 3.4 years and 3.3 years, respectively.(4)
    
    The Golden Triangle Mall acquired lease rights, lease
    obligations and in-place lease values are being amortized over
    the remaining lease terms and the remaining weighted average
    amortization expense periods as of December 31, 2006 are
    3.3 years, 4.0 years and 5.3 years, respectively.
    At December 31, 2006, we accrued $2,050 of additional
    in-place lease value in accordance with an earn-out provision in
    the purchase agreement.  Income
    Taxes
     85




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
      Year Ended December 31,2006


2005


2004Income tax (expense) benefit:Current  state

$
(25
)

$



$
Deferred  federal


170







Deferred  state


20







Income tax benefit, net

$
165


$



$
         Earnings
    Per Share
   86




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
    December 15,2004throughYears Ended


December 31,December 31,


20042006


2005


2004Net income (loss) attributable to
    common stockholders  basic

$
20,181


$
(2,633
)

$
(1,249
)Add back minority interest


2,469







Net income (loss) attributable to
    common stockholders  diluted

$
22,650


$
(2,633
)

$
(1,249
)Basic weighted average common
    shares


12,808,061



12,363,488



10,789,895Plus: weighted average unvested
    restricted shares


293,416







Plus: weighted average OP units


1,564,555







Diluted weighted average common
    shares


14,666,032



12,363,488



10,789,895Basic earnings (loss) per share

$
1.58


$
(0.21
)

$
(0.12
)Diluted earnings (loss) per share


1.54



(0.21
)


(0.12
)     Segment
    Information
    Recent
    Accounting Pronouncements
    Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement
    No. 109
  Fair Value Measurements
 87




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
      Share-Based
    Deferred Compensation
  Accounting for Stock-Based
    Compensation Share-Based Payment,
      Number of Unvested Shares


Weighted Average Share Price2006


2005


2006


2005Beginning balance


285,100






$
11.23



Shares granted


135,530



300,716



11.47


$
11.30Shares vested


(60,718
)






11.31



Shares forfeited


(33,838
)


(15,616
)


(11.73
)


(12.37
)Ending balance


326,074



285,100



11.28



11.23    88




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
        Reclassification
    3.
    Intangible
    Assets and Liabilities    Acquired


AcquiredAcquired


In-Place


LeaseLease Rights


Lease Values


ObligationsBalance at December 31, 2004

$
4,712


$
11,820


$
(5,323
)Acquisition of Colonie Center Mall


3,687



2,845



(3,439
)Colonie Center Mall earnout
    payments






2,384



Acquisition of Tallahassee Mall


1,215



4,358



(10,109
)Tallahassee Mall acquisition of
    long-term lease






(366
)


4,577Acquisition of Northgate Mall


7,839



2,701



(1,306
)Balance at December 31, 2005


17,453



23,742



(15,600
)Acquisition of Golden Triangle
    Mall(1)


992



2,841



(1,254
)Contribution of Foothills Mall to
    unconsolidated joint venture


(1,332
)


(4,558
)


1,971Contribution of Colonie Center
    Mall to unconsolidated joint venture


(3,739
)


(5,350
)


3,613Purchase and other adjustments


55



327



(174
)Lease expirations and terminations


(681
)


(1,479
)


1,157Balance at December 31, 2006

$
12,748


$
15,523


$
(10,287
)     (1)
    
    Includes $2,050 of additional consideration accrued at
    December 31, 2006 in accordance with an earn-out provision
    in the purchase agreement.  89




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  Acquired


AcquiredAcquired


In-Place


LeaseLease Rights


Lease Values


ObligationsAccumulated AmortizationBalance at December 31, 2004

$
(545
)

$
(316
)

$
586Amortization during the year


(2,703
)


(4,328
)


3,402Balance at December 31, 2005


(3,248
)


(4,644
)


3,988Contribution of Foothills Mall to
    joint venture


801



1,352



(903
)Contribution of Colonie Center
    Mall to joint venture


1,209



874



(1,574
)Lease expirations and terminations


681



1,479



(1,157
)Other adjustments


18







(77
)Amortization during the year


(2,947
)


(4,535
)


3,187Balance at December 31, 2006

$
(3,486
)

$
(5,474
)

$
3,464     4.
    Real
    Estate    Golden





Tallahassee


StratfordTriangle


Northgate Mall


Mall


SquareInitial cost of the acquired or
    purchased property:Land

$
9,198


$
11,120




(A)

$
11,528Buildings and improvements


30,473



98,223


$
64,775



74,547Cost capitalized subsequent to
    acquisition:Improvements


167



7,954



2,355



16,673Land and building purchased














6,391Total costs:Land


9,198



11,120







14,291Buildings and improvements


30,640



106,177



67,130



94,848Accumulated depreciation


(1,177
)


(5,161
)


(4,388
)


(4,238
)Date of acquisition


4/5/2006



7/12/2005



6/28/2005



12/30/2004Federal tax cost basis at
    December 31, 2006 (unaudited)

$
39,806


$
116,069


$
69,228


$
103,204      90




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
    2006


2005Buildings and improvements

$
259,095


$
345,459Tenant improvements


19,015



20,253Construction in progress


20,685



4,032Land


34,609



38,785Total investments in real estate


333,404



408,529Accumulated depreciation


(14,964
)


(12,421
)Investments in real estate, net

$
318,440


$
396,108     2006


2005


2004Real estate:Balance, beginning of the year

$
408,529


$
147,275


$
52,575Acquisition of mall properties


39,671



254,670



86,075Additions during the year


48,898



6,584



8,625Contribution of mall properties to
    unconsolidated joint ventures


(163,694
)






Balance, end of year

$
333,404


$
408,529


$
147,275   2006


2005


2004Accumulated depreciation:Balance, beginning of the year

$
12,421


$
3,622


$
2,102Contribution of mall properties to
    unconsolidated joint ventures


(9,936
)






Depreciation during the year


12,479



8,799



1,520Balance, end of year

$
14,964


$
12,421


$
3,622   5.
    Deferred
    Charges    2006


2005Deferred financing costs

$
3,230


$
2,314Deferred leasing costs


1,293



1,375Total


4,523



3,689Less accumulated amortization


(1,239
)


(846
)Net

$
3,284


$
2,843  91




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  6.
    Mortgage
    Loans Payable    2006


2005Mortgage loan payable 
    interest only at 5.09% payable monthly, secured by the Foothills
    Mall property, repaid June 2006

$



$
54,750Mortgage loan payable 
    interest only at 125 basis points over LIBOR (6.625% and
    5.625% at December 31, 2006 and 2005, respectively) payable
    monthly, due January 2008, secured by Stratford Square Mall
    property


75,000



75,000Mortgage loan payable 
    interest only at 140 basis points over LIBOR (5.789% at
    December 31, 2005) payable monthly, secured by Colonie
    Center Mall property assigned September 2006






50,766Mortgage loan payable 
    interest at 8.60% payable monthly, due July 11, 2029,
    anticipated repayment on July 11, 2009, secured by the
    Tallahassee Mall property


45,100



45,613Mortgage loan payable 
    interest at 6.60% payable monthly, due October 11, 2032
    anticipated prepayment date of November 11, 2012, secured
    by the Northgate Mall property


78,201



79,216Mortgage loan payable 
    interest at 5.15% payable monthly, due November 1, 2013,
    secured by the JCPenney Parcel at the Stratford Square Mall


3,202



Total mortgages outstanding


201,503



305,345Assumed above-market mortgage
    premiums, net


9,948



13,144Total mortgage loans payable

$
211,451


$
318,489          92




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
              2007

$
2,0402008


77,1602009


45,6182010


1,7862011


3,2652012 and thereafter


71,634Total principal payments


201,503Assumed above-market mortgage
    premiums, net


9,948Total

$
211,451     7.
    Junior
    Subordinated Debt Obligations   93




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
          8.
    Secured
    Line of Credit    12-month
    Increase in the Secured Line of Credit.
  9.
    Related
    Party Transactions   94




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
              10.
    Rentals
    Under Operating Leases   95




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
    Year ending December 31,2007

$
23,6752008


21,2142009


18,8592010


17,1982011


14,5792012 and thereafter


44,507Total future minimum base rentals

$
140,032     11.
    Due to
    Affiliates       96




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  12.
    Stockholders/Owners
    Equity        13.
    Minority
    Interest    14.
    Commitment
    and Contingencies           97




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
        Year ending December 31,2007

$
3852008


3502009


2742010


1852011


792012 and thereafter


Total minimum lease payments

$
1,273     Year ending December 31,2007

$
2202008


2282009


2362010


2442011


2522012 and thereafter


23,571Total minimum lease payments

$
24,751     gross-ups,
 98




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  15.
    Investments
    in Unconsolidated Partnerships  Foothills
    Mall
    30-year
      Harrisburg
    Mall
     99




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
            Colonie
    Center Mall
       100




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
            2006


2005Investment in real estate, net

$
257,041


$
50,050Receivables including deferred
    rents


5,768



1,182Other assets


31,865



11,886Total assets

$
294,674


$
63,118Mortgage loans payable

$
181,516


$
49,750Other liabilities


34,525



2,330Owners equity


78,633



11,038Total liabilities and owners
    equity

$
294,674


$
63,118The Companys share of
    owners equity

$
20,159


$
2,794  101




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FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
    Year Ended December 31,2006


2005


2004Revenue

$
21,540


$
10,544


$
9,665Operating and other expenses


(11,454
)


(5,127
)


(4,407
)Interest expense (including the
    amortization of deferred financing costs)


(6,965
)


(2,724
)


(938
)Depreciation and amortization


(6,467
)


(3,216
)


(1,649
)Other


50



(1,292
)


(924
)Net (loss) income

$
(3,296
)

$
(1,815
)

$
1,747The Companys and the
    predecessors share of net (loss) income

$
(550
)

$
(454
)

$
437     16.
    Fair
    Value of Financial Instruments    17.
    Financial
    Instruments: Derivatives and Hedging    Notional


Strike


Effective


Expiration


FairValue


Rate


Date


Date


ValueInterest rate swap

$
75,000



3.75
%


2/2005



1/2008


$
1,070Interest rate swap


75,000



4.91
%


1/2008



1/2011



(135
)      102




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FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  18.
    Quarterly
    Financial Information (Unaudited)    Three Months EndedDecember 31,


September 30,


June 30,


March 31,2006


2006


2006(1)


2006Total revenue

$
14,749


$
15,388


$
18,490


$
16,678Income (loss) before minority
    interests


(1,137
)


(1,982
)


27,314



(1,545
)Net income (loss)


(1,026
)


(1,767
)


24,352



(1,378
)Basic earnings (loss) per share

$
(0.08
)

$
(0.14
)

$
1.90


$
(0.11
)Diluted earnings (loss) per share


(0.08
)


(0.14
)


1.86



(0.11
)Weighted average shares
    outstanding:Basic


12,820,563



12,811,237



12,801,854



12,798,310Diluted


12,820,563



12,811,237



14,692,853



12,798,310     (1)
    
    Income for the three months ended June 30, 2006 includes a
    gain on the partial sale of real estate in the amount of
    $29,968. Diluted earnings per share was previously reported as
    $1.66.  Three Months EndedDecember 31,


September 30,


June 30,


March 31,2005


2005


2005


2005Total revenue

$
18,398


$
16,373


$
10,852


$
9,572Income (loss) before minority
    interests


(2,320
)


(1,294
)


231



418Net income (loss)


(2,061
)


(1,147
)


205



370Earnings (loss) per
    share  basic and diluted

$
(0.17
)

$
(0.09
)

$
0.02


$
0.03Weighted average shares
    outstanding:Basic


12,466,158



12,410,567



12,408,753



12,215,117Diluted


12,466,158



12,410,567



14,147,303



13,808,581   19.
    Subsequent
    Events  Convertible
    Preferred Equity Financing
  12-month
 103




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
      $25,000
    Credit Facility
    five-day
    Increase
    in the Secured Line of Credit
    $104,500
    Stratford Square Refinancing
      Dividend
   104




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##### Table of Contents



FELDMAN
    MALL PROPERTIES, INC. AND SUBSIDIARIES AND FELDMAN EQUITIES
    OF
    ARIZONA, LLC AND SUBSIDIARIES (PREDECESSOR)
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (Dollar Amounts in Thousands, Except Share and Per Share
    Data)
  Lloyd
    Miller  EVP of Leasing
   105




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##### Table of Contents



INDEPENDENT
    AUDITORS REPORT               106




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP



BALANCE
    SHEETS

(Amounts
    in thousands) December 31,2006


2005(Unaudited)ASSETS:Investments in real estate, net

$
47,693


$
50,050Cash and cash equivalents


20



1,117Restricted cash


88



66Rents, deferred rents and other
    receivables, net


1,460



1,182Note receivable


2,917



Acquired lease rights, net


468



701Deferred charges, net


9,036



9,565Other assets


454



437Total Assets

$
62,136


$
63,118LIABILITIES AND PARTNERS
    CAPITAL:Mortgage loan payable

$
49,750


$
49,750Deferred revenue


185



243Due to affiliates


365



82Accounts payable, accrued expenses
    and other liabilities


1,963



912Accrued interest


289



242Acquired lease obligation, net


557



851Total liabilities


53,109



52,080Partners capital


9,027



11,038Total Liabilities and
    Partners Capital

$
62,136


$
63,118    107




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP



STATEMENTS
    OF OPERATIONS

(Amounts
    in thousands) Year Ended December 31,2006


2005


2004(Unaudited)Revenue:Rental

$
6,206


$
6,360


$
5,918Tenant reimbursements


4,606



4,111



3,593Interest and other income


555



73



154Total revenue


11,367



10,544



9,665Expenses:Rental property operating and
    maintenance


4,592



4,033



3,901Real estate taxes


1,295



1,093



506Interest (including amortization
    of deferred financing costs)


3,448



2,724



938Depreciation and amortization


3,311



3,216



1,649General and administrative


367



936



624Other


365



357



300Total expenses


13,378



12,359



7,918Net (loss) income

$
(2,011
)

$
(1,815
)

$
1,747    108




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP



STATEMENTS
    OF PARTNERS CAPITAL

(Amounts
    in thousands) General Partner


Limited PartnerFeldmanFeldman


Harrisburg


Lubert-AdlerHarrisburg


Limited


InvestmentGP, Inc.


Partnership, LP


Partnerships


TotalBalance at December 31, 2003

$
152


$
3,690


$
11,389


$
15,231Capital contribution


24



570



1,781



2,375Net income


17



420



1,310



1,747Balance at December 31, 2004


193



4,680



14,480



19,353Capital distribution


(65
)


(1,560
)


(4,875
)


(6,500
)Net loss


(18
)


(436
)


(1,361
)


(1,815
)Balance at December 31, 2005


110



2,684



8,244



11,038Net loss (unaudited)


(20
)


(483
)


(1,508
)


(2,011
)Balance at December 31, 2006
    (unaudited)

$
90


$
2,201


$
6,736


$
9,027    109




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP



STATEMENTS
    OF CASH FLOWS

(Amounts
    in thousands) Year Ended December 312006


2005


2004(Unaudited)Cash Flows From Operating
    Activities:Net (loss) income

$
(2,011
)

$
(1,815
)

$
1,747Adjustments to reconcile net
    (loss) income to net cash provided by operating activities:Depreciation and amortization


3,311



3,216



1,649Amortization of deferred financing
    costs


111



361



343Provision for doubtful accounts
    receivable


165



376



9Net change in revenue related to
    acquired lease rights/obligations


(61
)


(284
)


(805
)Changes in operating assets and
    liabilities:Rents, deferred rents and other
    receivables


(443
)


(2,031
)


(410
)Restricted cash relating to
    operating activities


(22
)


(66
)


51Other assets


(17
)


(130
)


(66
)Due from/to affiliates


283



37



218Accounts payable, accrued expenses
    and other liabilities


(270
)


597



141Deferred revenue


(58
)


132



28Net cash provided by operating
    activities


988



393



2,905Cash Flows From Investing
    Activities:Expenditures for real estate
    improvements


(2,058
)


(3,396
)


(36,416
)Expenditures for leasing costs


(166
)


(110
)


(345
)Net cash used in investing
    activities


(2,224
)


(3,506
)


(36,761
)Cash Flows From Financing
    Activities:Proceeds from mortgage loan payable






8,668



30,910Repayment of mortgage loan payable






(3,216
)


Proceeds from government grants


283



4,750



1,000Payment of deferred financing costs


(144
)


(228
)


(26
)Capital contributions










2,375Capital distributions






(6,500
)


Net cash provided by financing
    activities


139



3,474



34,259Net increase (decrease) in cash
    and cash equivalents


(1,097
)


361



403Cash and cash equivalents,
    beginning of year


1,117



756



353Cash and cash equivalents, end of
    year

$
20


$
1,117


$
756Supplemental Disclosures of
    Cash Flow Information:Cash paid during the period for
    interest, net of amounts capitalized

$
3,317


$
2,121


$
594Non-cash financing and investing
    activities:Receivable relating to government
    grants for real estate improvements


3,200



250



3,125Accrued expenses relating to real
    estate improvements


1,338







2,194    110




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS
 DECEMBER 31, 2006
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  1.
    Organization
    and Description of Business    OwnershipPercentageFeldman Harrisburg General
    Partner, Inc.  general partner


1.0
%Limited Partners:Lubert-Adler investment
    partnerships


75.0
%Feldman Harrisburg Limited
    Partnership, LP (FHLP)


24.0
%         
    First, to the partners in an amount equal to the unpaid
    Additional Capital Contributions Preferred Return, as defined in
    the Partnership Agreement, owing to the partners ($0 at
    December 31, 2006), distributed to each partner pro rata in
    proportion to the amount of such partners unpaid
    Additional Capital Contributions Preferred Return;
    Second, to the partners in an amount, pro rata in proportion to
    each partners Unreturned Additional Capital Contributions
    Account, as defined in the Partnership Agreement ($0 at
    December 31, 2006), until each partners Unreturned
    Additional Capital Contributions Account has been reduced to
    zero;
    Third, to the partners in an amount equal to the unpaid Priority
    Return, as defined in the Partnership Agreement, owing to the
    partners (approximately $2,423 at December 31, 2006),
    distributed to each partner pro rata in proportion to the amount
    of such partners unpaid Priority Return; and
    Thereafter, (A) 20% to FHLP and (B) 80% to the
    partners pro rata in accordance with their respective Percentage
    Interests. Upon the receipt by the partners of distributions
    resulting to the realization of a 20% annualized internal rate
    of return on their investment from the inception, distributions
    thereafter shall be adjusted so that 30% shall be distributed to
    FHLP and 70% to the partners pro rata in accordance with their
    respective Percentage Interests. 111




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
     Allocations
    of Profits and Losses
      2.
    Summary
    of Significant Accounting Policies  Basis
    of Accounting
    Use of
    Estimates
    Cash
    and Cash Equivalents
    Revenue
    Recognition and Tenant Receivables
   112




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  Business
    Combinations
      Deferred
    Charges
    Real
    Estate and Depreciation
         113




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  Impairment
    of Long-Lived Assets
    Recent
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes
  Fair Value Measurements
  Income
    Taxes
    Conditional
    Asset Retirement Obligations
  catch-up
  3.
    Restricted
    Cash   114




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  4.
    Real
    Estate    2006


2005Land

$
6,156


$
6,156Building and improvements


15,684



16,550Tenant improvements


31,617



30,525Total investments in real estate


53,457



53,231Accumulated depreciation


(5,764
)


(3,181
)Net investments in real estate

$
47,693


$
50,050     2006


2005


2004Real Estate:Balance, beginning of the year

$
53,231


$
52,278


$
17,793Additions during the year


3,426



1,203



38,610Reimbursements from government
    grants


(3,200
)


(250
)


(4,125
)Balance, end of year

$
53,457


$
53,231


$
52,278Accumulated
    Depreciation:Balance, beginning of the year

$
3,181


$
821


$
76Depreciation during the year


2,583



2,360



745Balance, end of year

$
5,764


$
3,181


$
821   5.
    Rents,
    deferred rents, and other receivables    2006


2005Tenant receivables

$
3


$
84Government grant receivable






250Accrued rents


1,397



780Other receivable


60



68Total

$
1,460


$
1,182   6.
    Note
    Receivable   115




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  7.
    Deferred
    Charges    2006


2005Deferred financing costs

$
1,151


$
1,007Deferred leasing and construction
    costs


7,022



6,856Acquired in-place leases


4,387



4,387Total


12,560



12,250Less accumulated amortization


(3,524
)


(2,685
)Deferred charges, net

$
9,036


$
9,565     8.
    Mortgage
    Loan Payable    2006


2005Mortgage Loan Payable 
    interest only, payable monthly, secured by the real estate and
    an assignment of the leases

$
49,750


$
49,750          116




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  9.
    Related
    Party Transactions      10.
    Rentals
    Under Operating Leases      Year ending
    December 31,2007

$
4,1892008


3,8592009


3,3012010


3,0112011


2,5792012 and thereafter


20,473Total minimum future base rentals

$
37,412    117




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##### Table of Contents



FELDMAN
    LUBERT ADLER HARRISBURG LP
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
 (Dollar amounts in thousands)
 (2006 amounts are unaudited)
  11.
    Commitment
    and Contingencies      12.
    Subsequent
    Events     118




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  (1)
    Evaluation
    of Disclosure Controls and Procedures  Rule 13a-15(e).
  Rule 13a-15(f))
    (2)
    Managements
    Report on Internal Control over Financial Reporting  Rules 13a-15(f) 15d-15(f).
  
    We lacked personnel possessing technical accounting expertise
    adequate to ensure that our financial statements were prepared
    accurately and on a timely basis. As a result, certain controls
    and reconciliations associated with financial statement account
    balances were not performed on a timely basis, journal entries
    were recorded without adequate support, and review and approval
    procedures associated with critical financial reporting process
    controls were not documented. This material weakness in internal
    control over financial reporting resulted in misstatements
    deemed to be immaterial in 2006 and could have resulted in
    material misstatements to the Companys annual and interim
    financial statements.     119




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                  120




---



##### Table of Contents



(3)
    Managements
    Remedial Actions     121




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Form 10-K
  (516) 684-1239.
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Form 10-K
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K
  ITEM 13.
    CERTAIN
    RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE  Form 10-K
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K
  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENTS SCHEDULES        ExhibitNumber

Description3
.1

Amended and Restated Articles of
    Incorporation of Feldman Mall Properties, Inc.(1)3
.2

Second Amended and Restated Bylaws
    of Feldman Mall Properties, Inc.(2)3
.3

Amended and Restated Agreement of
    Limited Partnership of Feldman Equities Operating Partnership,
    LP.(5)3
.4

First Amendment to Amended and
    Restated Agreement of Limited Partnership of Feldman Equities
    Operating Partnership, LP.(5)3
.5

Declaration of Trust of Feldman
    Holdings Business Trust I.(1)3
.6

Declaration of Trust of Feldman
    Holdings Business Trust II.(1) 122




---



##### Table of Contents



ExhibitNumber

Description3
.7

Amended and Restated Operating
    Agreement of Feldman Equities of Arizona, LLC, dated as of
    August 13, 2004 by and between Feldman Partners, LLC,
    Feldman Equities Operating Partnership, LP, Lawrence Feldman,
    Jeffrey Erhart and Edward Feldman.(1)3
.8

Second Amended and Restated
    Agreement of Limited Agreement of Limited Partnership of Feldman
    Equities Operating Partnership, LP, dated as of August 26,
    2005.(9)10
.1

Registration Rights Agreement,
    dated as of November 15, 2004, by and among Feldman Mall
    Properties, Inc. and the parties listed on Schedule I
    thereto.(1)10
.2

Employment Agreement, dated
    December 13, 2004, by and between Feldman Mall Properties,
    Inc. and Lawrence Feldman.(5)10
.3

Employment Agreement, dated
    December 13, 2004, by and between Feldman Mall Properties,
    Inc. and James Bourg.(1)10
.4

Employment Agreement, dated
    December 13, 2004, by and between Feldman Mall Properties,
    Inc. and Scott Jensen.(1)10
.5

Employment Agreement, dated
    August 13, 2004, by and between Feldman Mall Properties,
    Inc. and Jeffrey Erhart.(1)10
.6

Employment Agreement, dated
    November 6, 2004, by and between Feldman Mall Properties,
    Inc. and Thomas E. Wirth.(1)10
.7

Subscription Agreement, dated
    August 13, 2004, by and between Feldman Equities Operating
    Partnership, LP, Feldman Equities of Arizona, LLC and Feldman
    Mall Properties, Inc.(1)10
.8

Contribution Agreement, dated as
    of August 13, 2004, by and between James Bourg, Feldman
    Equities Operating Partnership, LP and Feldman Equities of
    Arizona, LLC.(1)10
.9

Irrevocable Contribution
    Agreement, dated as of August 13, 2004, by and between
    Lawrence Feldman, Feldman Equities Operating Partnership, LP,
    Feldman Holdings Business Trust I, Feldman Mall Properties,
    Inc. and Feldman Equities of Arizona, LLC.(1)10
.10

Contribution Agreement, dated as
    of August 13, 2004, by and between Scott Jensen, Feldman
    Equities Operating Partnership, LP and Feldman Equities of
    Arizona, LLC.(1)10
.11

Contribution and Subscription
    Agreement, dated as of August 13, 2004, by and between
    Jeffrey Erhart and Feldman Equities of Arizona, LLC.(1)10
.12

Dubin Ownership Interest
    Assignment Agreement dated as of August 13, 2004, by and
    between Dennis Dubin, Mildred Dubin and Feldman Equities of
    Arizona, LLC.(1)10
.13

Ash Ownership Interests Assignment
    Agreement, dated as of August 13, 2004, by and among Ash
    Foothills Investors, LLC, Bruce Ash, Paul Ash and Feldman
    Equities of Arizona, LLC.(5)10
.14

Merger Agreement, dated as of
    August 13, 2004, by and between Feldman Equities General
    Partner Inc., Feldman Equities General Partner Merger Inc.,
    Feldman Equities Partners, LLC and Feldman Mall Properties,
    Inc.(1)10
.15

FHGP Merger Agreement, dated as of
    August 13, 2004, by and between Feldman Harrisburg General
    Partner Inc., Feldman Harrisburg General Partner Merger Inc.,
    Feldman Partners, LLC and Feldman Mall Properties, Inc.(1)10
.16

Recapitalization Agreement, dated
    as of August 13, 2004, by and between James Bourg, Scott
    Jensen, Feldman Equities Operating Partnership, LP and Feldman
    Mall Properties, Inc.(1)10
.17

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and James Bourg.(5)10
.18

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Lawrence Kaplan.(5)10
.19

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Thomas Wirth.(5)10
.20

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Jeffrey Erhart.(5) 123




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##### Table of Contents



ExhibitNumber

Description10
.21

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Scott Jensen.(5)10
.22

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Lawrence Feldman.(5)10
.23

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Bruce Moore.(5)10
.24

Indemnification Agreement, dated
    as of December 21, 2004, by and between Feldman Mall
    Properties, Inc. and Paul McDowell.(5)10
.25

Erhart Redemption Agreement,
    dated as of August 13, 2004, by and between Jeffrey Erhart,
    Feldman Equities of Arizona, LLC, Feldman Equities Operating
    Partnership, LP, Feldman Holdings Business Trust I and
    Feldman Mall Properties, Inc.(1)10
.26

Feldman Partners, LLC
    Redemption Agreement, dated as of August 13, 2004, by
    and between Feldman Partners, LLC, Feldman Equities of Arizona,
    LLC, Feldman Equities Operating Partnership, LP, Feldman
    Holdings Business Trust I and Feldman Mall Properties,
    Inc.(1)10
.27

Purchase and Sale Agreement, dated
    as of September 29, 2004, by and between BRE/Colonie Center
    LLC. and Feldman Equities Operating Partnership, LP.(1)10
.28

First Amendment to Purchase and
    Sale Agreement, dated December 13, 2004, by and between
    BRE/Colonie Center LLC and Feldman Equities Operating
    Partnership, LP.(3)10
.29

Second Amendment to Purchase and
    Sale Agreement, dated January 28, 2005, by and between
    BRE/Colonie Center LLC, FMP Colonie Center LLP and Feldman
    Equities Operating Partnership, LP.(3)10
.30

Waiver and Contribution Agreement,
    dated as of November 15, 2004, by and between Feldman
    Partners, LLC, Feldman Mall Properties, Inc. and Feldman
    Equities Operating Partnership, LP.(1)10
.31

Waiver and Contribution Agreement,
    dated as of November 15, 2004, by and between Lawrence
    Feldman, Feldman Mall Properties, Inc. and Feldman Equities
    Operating Partnership, LP.(1)10
.32

Waiver and Contribution Agreement,
    dated as of November 15, 2004, by and between James Bourg,
    Feldman Mall Properties, Inc. and Feldman Equities Operating
    Partnership, LP.(1)10
.33

Waiver and Contribution Agreement,
    dated as of November 15, 2004, by and between Scott Jensen,
    Feldman Mall Properties, Inc. and Feldman Equities Operating
    Partnership, LP.(1)10
.34

Waiver and Contribution Agreement,
    dated as of November 15, 2004, by and between Jeffrey
    Erhart, Feldman Mall Properties, Inc. and Feldman Equities
    Operating Partnership, LP.(1)10
.35

Limited Partnership Agreement of
    Feldman Lubert Adler Harrisburg LP, dated as of
    September 30, 2003.(1)10
.36

First Amendment to Limited
    Partnership Agreement of Feldman Lubert Adler Harrisburg LP,
    dated as October 1, 2003.(1)10
.37

Second Amendment to Limited
    Partnership Agreement of Feldman Lubert Adler Harrisburg LP,
    dated November 13, 2003.(1)10
.38

Agreement Regarding Feldman Lubert
    Adler Harrisburg LP, dated July 19, 2004.(1)10
.39

First Amendment to Feldman
    Partners, LLC Redemption Agreement, dated as of
    November 15, 2004, by and between Feldman Partners, LLC,
    Feldman Equities of Arizona, LLC, Feldman Equities Operating
    Partnership, LP, Feldman Holdings Business Trust I and
    Feldman Mall Properties, Inc.(1)10
.40

First Amendment to
    Recapitalization Agreement, dated as of November 15, 2004,
    by and between James Bourg, Scott Jensen, Feldman Equities
    Operating Partnership, LP and Feldman Mall Properties, Inc.(1)10
.41

2004 Incentive Bonus Plan.(1)10
.42

2004 Equity Incentive Plan.(1)10
.43

Purchase and Sale Agreement, dated
    as of December 29, 2004, by and between LaSalle Bank
    National Association and FMP Stratford LLC.(4)10
.44

Form of Restricted Stock
    Agreement(5)10
.45

Employment Agreement dated
    November 15, 2005, by and between Feldman Mall Properties,
    Inc. and Wayne Snyder.(6) 124




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##### Table of Contents



ExhibitNumber

Description10
.46

Employment Agreement dated
    December 23, 2005, by and between Feldman Mall Properties,
    Inc. and Lloyd Miller.(7)10
.47

Contract for Sale and Purchase,
    dated April 20, 2005, by and between Tallahassee Partners,
    Ltd. And FMP Tallahassee LLC.(8)10
.48

Amendment to Contract for Sale and
    Purchase, dated May 3, 2005, by and between Tallahassee
    Partners, Ltd. And FMP Tallahassee LLC.(8)10
.49

Second Amendment to Contract for
    Sale and Purchase, dated June 23, 2005, by and between
    Tallahassee Partners, Ltd. And FMP Tallahassee LLC.(8)10
.50

Second Amended and Restated
    Agreement of Limited Partnership of Feldman Equities Operating
    Partnership, LP, dated as of August 26, 2005.(9)10
.51

Amended and Restated Membership
    Interest Purchase Agreement, dated May 13, 2005, by and
    among Hocker Northgate Holdings I, Inc., Hocker Northgate
    Group, LLC, FMP Northgate LLC, and David E. Hocker. (10)10
.52

First Amendment to Amended and
    Restated Membership Interest Purchase Agreement, dated
    June 9, 2005, by and among Hocker Northgate
    Holdings I, Inc., Hocker Northgate Group, LLC, FMP
    Northgate LLC, and David E. Hocker.(10)10
.53

Second Amendment to Amended and
    Restated Membership Interest Purchase Agreement, dated
    July 1, 2005, by and among Hocker Northgate
    Holdings I, Inc., Hocker Northgate Group, LLC, FMP
    Northgate LLC, and David E. Hocker.(10)10
.54

Real Estate Purchase and Sale
    Agreement, dated April 27, 2005, by and among Northgate
    Investments, LLC and FMP Northgate Outparcel LLC.(10)10
.55

Agreement and Release, dated
    November 3, 2006, between Jeffrey Erhart and Feldman Mall
    Properties, Inc.(11)14
.0

Code of Business Conduct and
    Ethics(5)21
.1

List of Subsidiaries of Feldman
    Mall Properties, Inc.(12)31
.1

Certification of the Chief
    Executive Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.(12)31
.2

Certification of the Chief
    Financial Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.(12)32


Certifications of the Chief
    Executive Officer and Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.(12)     (1)
    
    Incorporated by reference from the Companys Registration
    Statement on
    Form S-11
    (File
    No. 333-118246
    dated December 15, 2004).(2)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on March 17, 2005.(3)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on February 7, 2005.(4)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on January 5, 2005.(5)
    
    Incorporated by reference from the Companys
    Form 10-K
    filed on April 15, 2005.(6)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on November 21, 2005.(7)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on December 30, 2005.(8)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on July 5, 2005.(9)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on August 30, 2005.(10)
    
    Incorporated by reference from the Companys
    Form 10-Q
    filed on August 15, 2005.(11)
    
    Incorporated by reference from the Companys
    Form 8-K
    filed on November 6, 2006.(12)
    
    Filed herewith. 125




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##### Table of Contents



SIGNATURES       By:
    /s/  Larry
    Feldman       By:
    /s/  Thomas
    Wirth   
      Name

Title

Date/s/  Larry
    FeldmanLarry
    Feldman

Chairman and Chief Executive
    Officer (principal executive officer)

June 14, 2007/s/  Thomas
    WirthThomas
    Wirth

Executive Vice President and Chief
    Financial Officer (principal financial and accounting officer)

June 14, 2007/s/  James
    BourgJames
    Bourg

Executive Vice President and Chief
    Operating Officer and Director

June 14, 2007/s/  Bruce
    MooreBruce
    Moore

Director

June 14, 2007/s/  Paul
    McDowellPaul
    McDowell

Director

June 14, 2007/s/  Lawrence
    KaplanLawrence
    Kaplan

Director

June 14, 2007  126