##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to  .
 Commission File No. 001-32365
 FELDMAN MALL PROPERTIES, INC.
  Maryland
    
    13-4284187(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 1010 Northern Boulevard  Suite 314, Great Neck, New York 11021
 (516) 684-1239
 o þ
  o þ o
 o þ




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##### 



FELDMAN MALL PROPERTIES, INC.
 INDEX
 PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSFeldman Mall Properties, Inc. and SubsidiariesConsolidated Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006
    
    
    3Consolidated Statements of Operations for the three and nine months ended September 30, 2007 and 2006 (unaudited)
    
    
    4Consolidated Statement of Stockholders Equity and Comprehensive Loss for the nine months ended September 30,
2007 (unaudited)
    
    
    5Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 (unaudited)
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    8ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    26ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 4. CONTROLS AND PROCEDURES
    
    
    39PART II. OTHER INFORMATION
    
    
    40ITEM 1. LEGAL PROCEEDINGS
    
    
    40ITEM 1A. RISK FACTORS
    
    
    40ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    40ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    41ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    41ITEM 5. OTHER INFORMATION
    
    
    41ITEM 6. EXHIBITS
    
    
    41Signatures
    
    
    42EX-31.1EX-32.1
  2




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##### Table of Contents



PART 1. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
 September 30, 2007
    
    
    December 31, 2006(Unaudited)ASSETS:Investments in real estate, net
    
    $
    342,288
    
    
    $
    318,440Investment in unconsolidated real estate partnerships
    
    
    37,931
    
    
    
    32,833Cash and cash equivalents
    
    
    1,804
    
    
    
    13,036Restricted cash
    
    
    21,136
    
    
    
    8,159Rents, deferred rents and other receivables, net
    
    
    7,090
    
    
    
    5,718Acquired below-market ground lease, net
    
    
    7,572
    
    
    
    7,674Acquired lease rights, net
    
    
    7,753
    
    
    
    9,262Acquired in-place lease values, net
    
    
    7,030
    
    
    
    10,049Deferred charges, net
    
    
    4,029
    
    
    
    3,284Other assets, net
    
    
    4,507
    
    
    
    5,396Total Assets
    
    $
    441,140
    
    
    $
    413,851LIABILITIES AND STOCKHOLDERS EQUITY:Mortgage loans payable
    
    $
    234,099
    
    
    $
    211,451Junior subordinated debt obligation
    
    
    29,380
    
    
    
    29,380Secured line of credit
    
    
    17,000
    
    
    
    Due to affiliates
    
    
    
    
    
    
    3,891Accounts payable, accrued expenses and other liabilities
    
    
    22,366
    
    
    
    25,832Dividends and distributions payable
    
    
    259
    
    
    
    3,315Acquired lease obligations, net
    
    
    5,458
    
    
    
    6,823Deferred gain on partial sale of real estate
    
    
    3,515
    
    
    
    3,515Negative carrying value of investment in unconsolidated partnership
    
    
    4,450
    
    
    
    4,450Total liabilities
    
    
    316,527
    
    
    
    288,657Minority interest
    
    
    10,408
    
    
    
    11,649Commitments and contingenciesStockholders EquitySeries A 6.85% Cumulative Convertible Preferred Stock; 2,000,000
shares authorized; 600,000 shares issued and outstanding; $25.00
liquidation preference
    
    
    14,580
    
    
    
    Common stock ($0.01 par value, 200,000,000 shares authorized,
13,034,331 and 13,155,062 issued and outstanding at September 30,
2007 and December 31, 2006, respectively)
    
    
    130
    
    
    
    132Additional paid-in capital
    
    
    120,562
    
    
    
    120,163Distributions in excess of earnings
    
    
    (19,826
    )
    
    
    (7,637
    )Accumulated other comprehensive income (loss)
    
    
    (1,241
    )
    
    
    887Total stockholders equity
    
    
    114,205
    
    
    
    113,545Total Liabilities and Stockholders Equity
    
    $
    441,140
    
    
    $
    413,851
  3




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Rental
    
    $
    7,898
    
    
    $
    9,643
    
    
    $
    23,294
    
    
    $
    32,120Tenant reimbursements
    
    
    3,596
    
    
    
    4,030
    
    
    
    10,593
    
    
    
    15,695Management, leasing and development services
    
    
    1,094
    
    
    
    183
    
    
    
    2,792
    
    
    
    440Interest and other income
    
    
    2,285
    
    
    
    1,532
    
    
    
    5,390
    
    
    
    2,301Total revenue
    
    
    14,873
    
    
    
    15,388
    
    
    
    42,069
    
    
    
    50,556Expenses:Rental property operating and maintenance
    
    
    4,595
    
    
    
    5,023
    
    
    
    13,388
    
    
    
    16,248Real estate taxes
    
    
    1,516
    
    
    
    1,661
    
    
    
    4,557
    
    
    
    6,231Interest (including amortization of
deferred financing costs)
    
    
    4,114
    
    
    
    3,880
    
    
    
    10,754
    
    
    
    13,183Loss from early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    379
    
    
    
    357Depreciation and amortization
    
    
    3,826
    
    
    
    3,892
    
    
    
    10,682
    
    
    
    13,839General and administrative
    
    
    3,754
    
    
    
    1,973
    
    
    
    10,993
    
    
    
    5,654Total expenses
    
    
    17,805
    
    
    
    16,429
    
    
    
    50,753
    
    
    
    55,512Equity in loss of unconsolidated real
estate partnerships
    
    
    (508
    )
    
    
    (370
    )
    
    
    (1,163
    )
    
    
    (654
    )(Loss) gain on partial sale of real estate
    
    
    
    
    
    
    (571
    )
    
    
    
    
    
    
    29,397(Loss) income before minority interest
    
    
    (3,440
    )
    
    
    (1,982
    )
    
    
    (9,847
    )
    
    
    23,787Minority interest
    
    
    311
    
    
    
    214
    
    
    
    919
    
    
    
    (2,580
    )Net (loss) income
    
    $
    (3,129
    )
    
    $
    (1,768
    )
    
    $
    (8,928
    )
    
    $
    21,207Basic (loss) income per share
    
    $
    (0.26
    )
    
    $
    (0.14
    )
    
    $
    (0.72
    )
    
    $
    1.66Diluted (loss) income per share
    
    
    (0.26
    )
    
    
    (0.14
    )
    
    
    (0.72
    )
    
    
    1.62Basic weighted averaged common shares
outstanding
    
    
    12,868
    
    
    
    12,811
    
    
    
    12,864
    
    
    
    12,804Weighted average common stock equivalents
outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,889Diluted weighted average common shares
outstanding
    
    
    12,868
    
    
    
    12,811
    
    
    
    12,864
    
    
    
    14,693
  4




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 AND COMPREHENSIVE LOSS
 (Amounts in thousands, except share data)
 (Unaudited)
 Nine months ended September 30, 2007
 Distributions
    
    
    AccumulatedNumber of
    
    
    Number of
    
    
    Series A
    
    
    
    
    
    
    Additional
    
    
    in
    
    
    OtherPreferred
    
    
    Common
    
    
    Preferred
    
    
    Common
    
    
    Paid-In
    
    
    Excess
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Shares
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    of Earnings
    
    
    Income (Loss)
    
    
    Total
    
    
    LossBalance at December 31, 2006
    
    
    
    
    
    
    13,155,062
    
    
    $
    
    
    
    $
    132
    
    
    $
    120,163
    
    
    $
    (7,637
    )
    
    $
    887
    
    
    $
    113,545
    
    
    $
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,928
    )
    
    
    
    
    
    
    (8,928
    )
    
    
    (8,928
    )Preferred shares issued
    
    
    600,000
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    Stock issue costs
    
    
    
    
    
    
    
    
    
    
    (420
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (420
    )
    
    
    Unrealized loss on
derivative instruments, net
of $19 recorded in interest
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,128
    )
    
    
    (2,128
    )
    
    
    (2,128
    )Restricted stock granted
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock forfeited
    
    
    
    
    
    
    (125,731
    )
    
    
    
    
    
    
    (2
    )
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    Dividends on forfeited
nonvested stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    160
    
    
    
    Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,421
    )
    
    
    
    
    
    
    (3,421
    )
    
    
    Balance at September 30, 2007
    
    
    600,000
    
    
    
    13,034,331
    
    
    $
    14,580
    
    
    $
    130
    
    
    $
    120,562
    
    
    $
    (19,826
    )
    
    $
    (1,241
    )
    
    $
    114,205
    
    
    $
    (11,056
    )
  5




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands)
 (Unaudited)
 Nine months ended September 30,2007
    
    
    2006Cash Flows From Operating Activities:Net (loss) income
    
    $
    (8,928
    )
    
    $
    21,207Adjustments to reconcile net (loss) income to net cash (used in) provided
by operating activities:Gain on partial sale of real estate
    
    
    
    
    
    
    (29,397
    )Depreciation and amortization
    
    
    10,682
    
    
    
    13,839Loss from early extinguishment of debt
    
    
    179
    
    
    
    357Amortization of deferred financing costs
    
    
    805
    
    
    
    638Provision for doubtful accounts receivable
    
    
    965
    
    
    
    514Noncash stock compensation
    
    
    397
    
    
    
    581Interest (accretion) amortization, net
    
    
    (2,400
    )
    
    
    (2,431
    )Amortization of ground rent
    
    
    264
    
    
    
    213Minority interest
    
    
    (919
    )
    
    
    2,580Equity in loss of unconsolidated real estate partnerships
    
    
    1,163
    
    
    
    654Net change in revenue related to acquired lease rights/obligations
    
    
    144
    
    
    
    (85
    )Deferred tax expense
    
    
    161
    
    
    
    Other noncash income
    
    
    (3,734
    )
    
    
    (1,236
    )Changes in operating assets and liabilities:Rents, deferred rents and other receivables
    
    
    (2,337
    )
    
    
    (1,924
    )Restricted cash relating to operating activities
    
    
    676
    
    
    
    884Other deferred costs
    
    
    (664
    )
    
    
    (1,851
    )Other assets, net
    
    
    (224
    )
    
    
    (2,105
    )Accounts payable, accrued expenses and other liabilities
    
    
    (2,598
    )
    
    
    621Net cash (used in) provided by operating activities
    
    
    (6,366
    )
    
    
    3,059Cash Flows From Investing Activities:Proceeds from partial sale of real estate, net
    
    
    
    
    
    
    80,319Expenditures for real estate improvements
    
    
    (32,512
    )
    
    
    (27,634
    )Real estate acquisitions, net of assumed liabilities
    
    
    (1,500
    )
    
    
    (43,235
    )Change in restricted cash relating to investing activities
    
    
    119
    
    
    
    (10,198
    )Advances to unconsolidated real estate partnerships
    
    
    (6,261
    )
    
    
    (424
    )Other
    
    
    
    
    
    
    (880
    )Net cash used in investing activities
    
    
    (40,154
    )
    
    
    (2,052
    )Cash Flows From Financing Activities:Proceeds from junior subordinated debt obligations
    
    
    
    
    
    
    29,380Proceeds from lines of credit
    
    
    17,000
    
    
    
    4,000Proceeds from mortgages and notes payable
    
    
    104,500
    
    
    
    10,000Repayment of mortgages and notes payable
    
    
    (79,417
    )
    
    
    (11,286
    )Payment of deferred financing costs
    
    
    (970
    )
    
    
    (1,431
    )Proceeds from sale of Series A preferred stock, net of issue costs
    
    
    14,745
    
    
    
    Change in restricted cash related to financing activities
    
    
    (13,772
    )
    
    
    31Distributions and dividends
    
    
    (6,798
    )
    
    
    (10,016
    )Net cash provided by financing activities
    
    
    35,288
    
    
    
    20,678Net change in cash and cash equivalents
    
    
    (11,232
    )
    
    
    21,685Cash and cash equivalents, beginning of period
    
    
    13,036
    
    
    
    14,331Cash and cash equivalents, end of period
    
    $
    1,804
    
    
    $
    36,016
 6




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS  CONTINUED
(Amounts in thousands)
(Unaudited)
 Nine months ended September 30,2007
    
    
    2006Supplemental disclosures of cash flow information:Cash paid during the period for interest, net of amounts capitalized
    
    $
    12,783
    
    
    $
    15,835Supplemental disclosures of noncash investing and financing activities:Accrued renovation costs
    
    
    4,781
    
    
    
    4,027Unrealized loss on derivative instruments
    
    
    (2,128
    )
    
    
    (53
    )Dividends and distributions payable
    
    
    259
    
    
    
    3,347Accrued financing costs
    
    
    312
    
    
    
    Accrued preferred stock issuance costs
    
    
    165
    
    
    
    Assets acquired in connection with real estate acquisition
    
    
    
    
    
    
    19Liabilities assumed in connection with real estate acquisition
    
    
    1,711
    
    
    
    3,669Contribution of property to joint ventures
    
    
    
    
    
    $
    134,240Investment in real estate, net
    
    
    
    
    
    
    13,722Other assets
    
    
    
    
    
    
    (105,516
    )Mortgage loans
    
    
    
    
    
    
    (4,370
    )Liabilities
    
    
    
    
    
    $
    38,076
  7




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
September 30, 2007
(Dollar amounts in thousands, except share and per share data)
 1. Organization and Description of Business
       2. Summary of Significant Accounting Policies
 Basis of Quarterly Presentation
   8




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##### Table of Contents



Principles of Accounting and Consolidation and Equity Method of Accounting
  Consolidation of
Variable Interest Entities
  The Equity Method of Accounting for Investments in
Common Stock
 Accounting for
Investments in Real Estate Ventures
   Gains on Disposition of Real Estate
   9




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##### Table of Contents



Critical Accounting Policies and Managements Estimates
       Cash and Cash Equivalents
  Restricted Cash
  Revenue Recognition and Tenant Receivables
  10




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##### Table of Contents



Deferred Charges
  Issuance Costs
  Investments in Real Estate and Depreciation
  11




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest
    
    $
    40
    
    
    $
    349
    
    
    $
    699
    
    
    $
    581Real estate taxes
    
    
    
    
    
    
    172
    
    
    
    167
    
    
    
    327Insurance
    
    
    
    
    
    
    18
    
    
    
    15
    
    
    
    34Total
    
    $
    40
    
    
    $
    539
    
    
    $
    881
    
    
    $
    942
     September 30, 2007
    
    
    December 31, 2006Buildings and improvements
    
    $
    294,343
    
    
    $
    257,598Tenant improvements
    
    
    21,807
    
    
    
    19,015Furniture, fixtures and equipment
    
    
    7,473
    
    
    
    1,497Construction in progress
    
    
    3,935
    
    
    
    20,685Land
    
    
    37,851
    
    
    
    34,609Total investments in real estate
    
    
    365,409
    
    
    
    333,404Accumulated depreciation
    
    
    (23,121
    )
    
    
    (14,964
    )Investments in real estate, net
    
    $
    342,288
    
    
    $
    318,440
 Due to Affiliates
  Conditional Asset Retirement Obligations
   12




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##### Table of Contents



Impairment of Long-Lived Assets
 Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
 Derivative Instruments
     Purchase Accounting for Acquisition of Interests in Real Estate Entities
 Business
Combinations
  13




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##### Table of Contents



GoldenTriangleLand
    
    $
    9,198Building and improvements
    
    
    30,473Acquired lease rights
    
    
    992In-place lease values
    
    
    791Acquired lease obligations
    
    
    (1,254
    )Total purchase price
    
    $
    40,200
  Income Taxes
  14




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##### Table of Contents



Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109
 Earnings (Loss) Per Share
  15




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net (loss) income
    
    $
    (3,129
    )
    
    $
    (1,768
    )
    
    $
    (8,928
    )
    
    $
    21,207Less preferred stock dividends, net of minority
interest ($25 and $42, respectively)
    
    
    (233
    )
    
    
    
    
    
    
    (391
    )
    
    
    Net (loss) income available to common stockholdersbasic
    
    
    (3,362
    )
    
    
    (1,768
    )
    
    
    (9,319
    )
    
    
    21,207Add back minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,580Net (loss) income attributable to common
stockholdersdiluted
    
    $
    (3,362
    )
    
    $
    (1,768
    )
    
    $
    (9,319
    )
    
    $
    23,787Basic weighted average common shares
    
    
    12,867,834
    
    
    
    12,811,237
    
    
    
    12,863,723
    
    
    
    12,803,848Plus: weighted average unvested restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296,020Plus: weighted average OP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,593,464Diluted weighted average common shares
    
    
    12,867,834
    
    
    
    12,811,237
    
    
    
    12,863,723
    
    
    
    14,693,332Basic (loss) income per share
    
    $
    (0.26
    )
    
    $
    (0.14
    )
    
    $
    (0.72
    )
    
    $
    1.66Diluted (loss) income per share
    
    
    (0.26
    )
    
    
    (0.14
    )
    
    
    (0.72
    )
    
    
    1.62
 Segment Information
  Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities
 Share-Based Deferred Compensation
   16




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##### Table of Contents



Number of Unvested Shares
    
    
    Weighted Average Share Price2007
    
    
    2006
    
    
    2007
    
    
    2006Beginning balance
    
    
    326,074
    
    
    
    285,100
    
    
    $
    11.28
    
    
    $
    11.23Shares granted
    
    
    5,000
    
    
    
    74,568
    
    
    
    11.31
    
    
    
    11.28Shares vested
    
    
    (40,159
    )
    
    
    (42,967
    )
    
    
    12.15
    
    
    
    11.87Shares forfeited
    
    
    (125,731
    )
    
    
    (7,692
    )
    
    
    10.15
    
    
    
    12.37Ending balance
    
    
    165,184
    
    
    
    309,009
    
    
    
    11.92
    
    
    
    11.14
   Reclassification
  3. Mortgage Loans Payable
  September 30, 2007
    
    
    December 31, 2006Mortgage loan payable  interest only at
115 basis points over LIBOR (6.90% at
September 30, 2007) payable monthly, due
May 2010, secured by Stratford Square Mall
property
    
    $
    104,500
    
    
    $
    Mortgage loan payable  interest only at
125 basis points over LIBOR (6.625% at
December 31, 2006) payable monthly, due
January 2008, secured by Stratford Square
Mall property
    
    
    
    
    
    
    75,000Mortgage loan payable  interest at 8.60%
payable monthly, due July 11, 2029,
anticipated repayment on July 11, 2009,
secured by the Tallahassee Mall property
    
    
    44,688
    
    
    
    45,100Mortgage 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
    
    
    77,398
    
    
    
    78,201Mortgage loan payable  interest at 5.15%
payable monthly, due November 1, 2013,
secured by the JCPenney parcel at the
Stratford Square Mall
    
    
    
    
    
    
    3,202Total mortgages outstanding
    
    
    226,586
    
    
    
    201,503Assumed above-market mortgage premiums, net
    
    
    7,513
    
    
    
    9,948Total mortgage loans payable
    
    $
    234,099
    
    
    $
    211,451
   17




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##### Table of Contents



2007 (three months)
    
    $
    4292008
    
    
    1,7442009
    
    
    45,1792010
    
    
    105,8242011
    
    
    1,4152012
    
    
    1,3642013 and thereafter
    
    
    70,631Total principal payments
    
    
    226,586Assumed above-market mortgage premiums, net
    
    
    7,513Total
    
    $
    234,099
  4. Junior Subordinated Debt Obligation
  18




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##### Table of Contents



5. Lines of Credit
 $30,000 Secured Line of Credit
     $25,000 Credit Facility
    6. Related Party Transactions
  19




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##### Table of Contents



7. Rentals Under Operating Leases
   Year Ending December 31,2007 (three months)
    
    $
    6,6292008
    
    
    24,1422009
    
    
    21,4752010
    
    
    19,4602011
    
    
    16,1482012 and thereafter
    
    
    63,878Total future minimum base rentals
    
    $
    151,732
  8. Due to Affiliates
  20




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##### Table of Contents



9. Stockholders Equity
  Subsequent Events.
    10. Minority Interest
  11. Commitment and Contingencies
     21




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##### Table of Contents



12. Investments in Unconsolidated Partnerships
 Foothills Mall
    22




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##### Table of Contents



Harrisburg Mall
       Colonie Center Mall
    23




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##### Table of Contents



September 30, 2007
    
    
    December 31, 2006Investment in real estate, net
    
    $
    309,125
    
    
    $
    257,041Receivables including deferred rents
    
    
    1,785
    
    
    
    5,768Other assets
    
    
    37,346
    
    
    
    31,865Total assets
    
    $
    348,256
    
    
    $
    294,674Mortgage loans payable
    
    $
    223,660
    
    
    $
    181,516Other liabilities
    
    
    44,758
    
    
    
    34,525Owners equity
    
    
    79,838
    
    
    
    78,633Total liabilities and owners equity
    
    $
    348,256
    
    
    $
    294,674The Companys share of owners equity
    
    $
    20,264
    
    
    $
    20,159
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    8,710
    
    
    $
    6,373
    
    
    $
    26,922
    
    
    $
    11,662Operating and other expenses
    
    
    (5,297
    )
    
    
    (3,122
    )
    
    
    (15,270
    )
    
    
    (6,225
    )Interest expense (including the amortization of deferred financing costs)
    
    
    (3,248
    )
    
    
    (2,229
    )
    
    
    (9,439
    )
    
    
    (3,882
    )Depreciation and amortization
    
    
    (2,671
    )
    
    
    (2,270
    )
    
    
    (8,419
    )
    
    
    (3,940
    )Net loss
    
    $
    (2,506
    )
    
    $
    (1,248
    )
    
    $
    (6,206
    )
    
    $
    (2,385
    )The Companys share of net loss
    
    $
    (508
    )
    
    $
    (370
    )
    
    $
    (1,163
    )
    
    $
    (654
    )
  24




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##### Table of Contents



13. Fair Value of Financial Instruments
  14. Financial Instruments  Derivatives and Hedging
  Notional
    
    Strike
    
    Effective
    
    Expiration
    
    FairValue
    
    Rate
    

Date
    

Date
    
    ValueInterest Rate Swap
    
    $
    75,000
    
    
    
    3.75
    %
    
    
    2/2005
    
    
    
    1/2008
    
    
    $
    263Interest Rate Swap
    
    
    75,000
    
    
    
    4.91
    %
    
    
    1/2008
    
    
    
    1/2011
    
    
    
    (840
    )Interest Rate Swap
    
    
    29,500
    
    
    
    5.50
    %
    
    
    6/2007
    
    
    
    5/2010
    
    
    
    (729
    )
   15. Subsequent Events
 Series A Preferred Stock
  Stockholders Equity.
 Executive Management Restructuring
  
    
    Larry Feldman has given up his position as CEO and the accompanying management
responsibilities so that he may focus on the critical real estate imperatives facing our
Company including leasing, anchor tenant retention and replacement, redevelopment and
construction, and strategic direction and planning for our Company. He remains Chairman of
the Board.
    
    Tom Wirth has been named President and remains CFO. Tom assumed management
responsibilities for our Company with a focus on public company obligations including
financial reporting.
    
    To provide support to, and more direct oversight of management, the independent board
members have formed an executive committee led by Bruce Moore. The executive committee will
remain in place until such time as we have retained additional executive talent, or the
committee deems its assistance is no longer required.
  25




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   Critical Accounting Policies
  Revenue Recognition
     Principles of Consolidation and Equity Method of Accounting
   26




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##### Table of Contents



Consolidation of Variable Interest Entities
  The Equity Method of Accounting for Investments in
Common Stock
 Accounting for
Investments in Real Estate Ventures
   Investments in Real Estate and Real Estate Entities
    27




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##### Table of Contents



Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of
   Gains on Disposition of Real Estate
   Purchase Price Allocation
 Business
Combinations
    28




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##### Table of Contents



Depreciation
  Derivative Instruments
     Results of Operations
 Overview
  
    
    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 subsequent to April 2011 at a variable interest rate equal to
LIBOR plus 3.45% per annum.
 
    
    On April 5, 2006, we acquired Golden Triangle in the Dallas suburb of Denton, Texas, for
approximately $41.2 million (including $1.0 million of additional consideration paid in
accordance with an earn-out provision in the purchase agreement).
 29




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##### Table of Contents




    
    On April 5, 2006, in connection with the acquisition of Golden Triangle, we entered into a
$24.6 million secured line of credit which bears interest at 140 basis points over LIBOR. On
April 20, 2007, we increased the line to $30.0 million. As of September 30, 2007, the
outstanding balance was $17,000.
 
    
    On April, 7, 2006, we acquired the building occupied by JCPenney and related acreage at
Stratford Square for a price of $6.7 million. The purchase price included assumption of a loan
secured by the property and had a principal balance of approximately $3.5 million. On May 8,
2007, we repaid this loan in connection with the Stratford Square mortgage refinancing
described below.
 
    
    On June 29, 2006, we contributed Foothills 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 approximately $38.9 million and recognized a $29.4 million gain on the partial sale
of the property. 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 on our credit
facility provided by Kimco Realty Corp.
 
    
    On September 29, 2006, we contributed Colonie to a joint venture and retained a 25.0%
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
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.
 
    
    On April 30, 2007, we issued $15.0 million in preferred stock.
    
    On May 8, 2007, we closed on a $104.5 million first mortgage loan secured by Stratford. On
the closing date, $75.0 million of the proceeds were used to retire Stratfords outstanding
$75.0 million first mortgage. Comparison of the Three Months Ended September 30, 2007 to the Three Months Ended September 30,
2006
 Revenues
      30




---



##### Table of Contents



Expenses
 .
     Other
   Comparison of the Nine months ended September 30, 2007 to the Nine months ended September 30, 2006
 Revenues
     31




---



##### Table of Contents



Expenses
 .
      Other
    32




---



##### Table of Contents



Cash Flows
 Comparison of the Nine months ended September 30, 2007 to the Nine months ended September 30,
2006
     Liquidity and Capital Resources
     Short-Term Liquidity Requirements
  33




---



##### Table of Contents



th
   Secured Line of Credit
   34




---



##### Table of Contents



Convertible Preferred Equity Financing
    $25 Million Credit Facility
   $104.5 Million Stratford Square Refinancing
   Long-Term Liquidity Requirements
 Long-Term Liquidity Requirements
   35




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##### Table of Contents



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(three months)
    
    $
    8,281
    
    
    $
    8,926
    
    
    $
    4,652
    
    
    $
    1,044
    
    
    $
    151
    
    
    $
    23,0542008
    
    
    21,289
    
    
    
    4,648
    
    
    
    18,607
    
    
    
    38,858
    
    
    
    578
    
    
    
    83,9802009
    
    
    1,500
    
    
    
    
    
    
    
    58,079
    
    
    
    1,517
    
    
    
    510
    
    
    
    61,6062010
    
    
    
    
    
    
    
    
    
    
    115,055
    
    
    
    1,517
    
    
    
    429
    
    
    
    117,0012011
    
    
    
    
    
    
    
    
    
    
    8,763
    
    
    
    1,640
    
    
    
    331
    
    
    
    10,7342012 and thereafter
    
    
    
    
    
    
    
    
    
    
    167,744
    
    
    
    31,651
    
    
    
    23,571
    
    
    
    222,966Total
    
    $
    31,070
    
    
    $
    13,574
    
    
    $
    372,900
    
    
    $
    76,227
    
    
    $
    25,570
    
    
    $
    519,341
 
 (1)
    
    Amounts include interest payments based on contractual terms and current interest rates for
variable rate debt. Mortgage Loans
 Northgate Mall
  Tallahassee Mall
  36




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##### Table of Contents



Stratford Square Mall
  Colonie Center Mall Joint Venture
   Foothills Mall Joint Venture
  Harrisburg Mall Joint Venture
    Capital Expenditures
  Off-Balance Sheet Arrangements
 Loan Guarantees
  37




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##### Table of Contents



Forward Swap Contracts
   Tax Indemnifications
   Funds From Operations
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net (loss) income available to common shareholders
    
    $
    (3,362
    )
    
    $
    (1,768
    )
    
    $
    (9,319
    )
    
    $
    21,207Add:Depreciation and amortization (excluding FF&E)
    
    
    3,691
    
    
    
    3,779
    
    
    
    10,305
    
    
    
    13,638FFO contribution from unconsolidated joint venture
    
    
    590
    
    
    
    651
    
    
    
    1,837
    
    
    
    1,039Less:Loss (gain) on partial sale of real estate
    
    
    
    
    
    
    571
    
    
    
    
    
    
    
    (29,397
    )Minority interest
    
    
    (311
    )
    
    
    (214
    )
    
    
    (919
    )
    
    
    2,580FFO available to common stockholders and OP unit holders
    
    $
    608
    
    
    $
    3,019
    
    
    $
    1,904
    
    
    $
    9,067
 38




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  Market Risk Related to Fixed Rate Debt
    Market Risk Related to Other Obligations
   Inflation
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  39




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##### Table of Contents



Managements Remedial Actions
  
 PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  40




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##### Table of Contents



ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 31.1
    
    Certification by the President and Chief Financial Officer pursuant to section 302 of the
Sarbanes-Oxley Act of 2002 filed herewith.32.1
    
    Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 202 filed herewith.
 41




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##### Table of Contents



SIGNATURES
  Date: December 21, 2007
    
    FELDMAN MALL PROPERTIES, INC.By:
    
    /s/ Thomas WirthName: Thomas WirthTitle: President and Chief Financial Officer
 42




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##### Table of Contents



EXHIBITS
 31.1
    
    Certification by the President and Chief Financial Officer pursuant to section 302 of the
Sarbanes-Oxley Act of 2002 filed herewith.32.1
    
    Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 202 filed herewith.
 43