##### 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 from June 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
(State or other jurisdiction 
of incorporation or organization)
    
    13-4284187
(I.R.S. Employer
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 June 30, 2007 (unaudited) and December 31, 2006
    
    
    3Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006 (unaudited)
    
    
    4Consolidated Statement of Stockholders Equity and Comprehensive Loss for the six months ended June 30, 2007
(unaudited)
    
    
    5Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006 (unaudited)
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    27ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    40PART 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
    
    
    
    
    42Exhibit 31.1Exhibit 31.2Exhibit 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)
 June 30, 2007
    
    
    December 31, 2006(Unaudited)ASSETS:Investments in real estate, net
    
    $
    339,265
    
    
    $
    318,440Investment in unconsolidated real estate partnerships
    
    
    36,461
    
    
    
    32,833Cash and cash equivalents
    
    
    3,962
    
    
    
    13,036Restricted cash
    
    
    31,115
    
    
    
    8,159Rents, deferred rents and other receivables, net
    
    
    6,433
    
    
    
    5,718Acquired below-market ground lease, net
    
    
    7,606
    
    
    
    7,674Acquired lease rights, net
    
    
    8,211
    
    
    
    9,262Acquired in-place lease values, net
    
    
    7,706
    
    
    
    10,049Deferred charges, net
    
    
    4,289
    
    
    
    3,284Other assets, net
    
    
    6,397
    
    
    
    5,396Total Assets
    
    $
    451,445
    
    
    $
    413,851LIABILITIES AND STOCKHOLDERS EQUITY:Mortgage loans payable
    
    $
    235,291
    
    
    $
    211,451Junior subordinated debt obligation
    
    
    29,380
    
    
    
    29,380Secured line of credit
    
    
    13,000
    
    
    
    Due to affiliates
    
    
    1,654
    
    
    
    3,891Accounts payable, accrued expenses and other liabilities
    
    
    27,500
    
    
    
    25,832Dividends and distributions payable
    
    
    175
    
    
    
    3,315Acquired lease obligations, net
    
    
    5,903
    
    
    
    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
    
    
    320,868
    
    
    
    288,657Minority interest
    
    
    10,719
    
    
    
    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
    
    
    14,599
    
    
    
    Common stock ($0.01 par value, 200,000,000 shares authorized,
13,047,370 and 13,155,062 issued and outstanding at June 30, 2007
and December 31, 2006, respectively)
    
    
    131
    
    
    
    132Additional paid-in capital
    
    
    120,453
    
    
    
    120,163Distributions in excess of earnings
    
    
    (16,463
    )
    
    
    (7,637
    )Accumulated other comprehensive income
    
    
    1,138
    
    
    
    887Total stockholders equity
    
    
    119,858
    
    
    
    113,545Total Liabilities and Stockholders Equity
    
    $
    451,445
    
    
    $
    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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Rental
    
    $
    7,687
    
    
    $
    11,787
    
    
    $
    15,396
    
    
    $
    22,477Tenant reimbursements
    
    
    3,417
    
    
    
    6,326
    
    
    
    6,997
    
    
    
    11,665Management, leasing and development services
    
    
    875
    
    
    
    112
    
    
    
    1,698
    
    
    
    257Interest and other income
    
    
    457
    
    
    
    265
    
    
    
    3,105
    
    
    
    769Total revenue
    
    
    12,436
    
    
    
    18,490
    
    
    
    27,196
    
    
    
    35,168Expenses:Rental property operating and maintenance
    
    
    4,462
    
    
    
    5,701
    
    
    
    8,793
    
    
    
    11,225Real estate taxes
    
    
    1,463
    
    
    
    2,518
    
    
    
    3,041
    
    
    
    4,570Interest (including amortization of deferred financing costs)
    
    
    3,529
    
    
    
    5,129
    
    
    
    6,640
    
    
    
    9,303Loss from early extinguishment of debt
    
    
    379
    
    
    
    357
    
    
    
    379
    
    
    
    357Depreciation and amortization
    
    
    3,451
    
    
    
    5,500
    
    
    
    6,856
    
    
    
    9,947General and administrative
    
    
    4,302
    
    
    
    1,800
    
    
    
    7,239
    
    
    
    3,681Total expenses
    
    
    17,586
    
    
    
    21,005
    
    
    
    32,948
    
    
    
    39,083Loss from operations
    
    
    (5,150
    )
    
    
    (2,515
    )
    
    
    (5,752
    )
    
    
    (3,915
    )Equity in loss of unconsolidated real estate partnerships
    
    
    (300
    )
    
    
    (139
    )
    
    
    (655
    )
    
    
    (284
    )Gain on partial sale of real estate
    
    
    
    
    
    
    29,968
    
    
    
    
    
    
    
    29,968Income (loss) before minority interest
    
    
    (5,450
    )
    
    
    27,314
    
    
    
    (6,407
    )
    
    
    25,769Minority interest
    
    
    515
    
    
    
    (2,962
    )
    
    
    608
    
    
    
    (2,795
    )Net income (loss)
    
    $
    (4,935
    )
    
    $
    24,352
    
    
    $
    (5,799
    )
    
    $
    22,974Basic income (loss) per share
    
    $
    (0.40
    )
    
    $
    1.90
    
    
    $
    (0.46
    )
    
    $
    1.79Diluted income (loss) per share
    
    
    (0.40
    )
    
    
    1.86
    
    
    
    (0.46
    )
    
    
    1.75Weighted average common shares outstanding:Basic
    
    
    12,862
    
    
    
    12,802
    
    
    
    12,862
    
    
    
    12,800Diluted
    
    
    12,862
    
    
    
    14,693
    
    
    
    12,862
    
    
    
    14,684
  4




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE LOSS
(Amounts in thousands, except share data)
(Unaudited)
 Six months ended June 30, 2007
 Number of
    
    
    
    
    
    
    Series A
    
    
    
    
    
    
    Distributions in
    
    
    Accumulated OtherCommon
    
    
    Common
    
    
    Preferred
    
    
    Additional Paid-
    
    
    Excess
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Stock
    
    
    In Capital
    
    
    of Earnings
    
    
    Income
    
    
    Total
    
    
    LossBalance at December
31, 2006
    
    
    13,155,062
    
    
    $
    132
    
    
    $
    
    
    
    $
    120,163
    
    
    $
    (7,637
    )
    
    $
    887
    
    
    $
    113,545
    
    
    $
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,799
    )
    
    
    
    
    
    
    (5,799
    )
    
    
    (5,799
    )Preferred shares
issued (600,000)
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    Stock issue costs
    
    
    
    
    
    
    
    
    
    
    (401
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (401
    )
    
    
    Unrealized gain on
derivative
instruments, net of
$18 recorded in
interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251
    
    
    
    251
    
    
    
    251Restricted stock
granted
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock
forfeited
    
    
    (112,692
    )
    
    
    (1
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based
compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    Dividends on
forfeited nonvested
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135
    
    
    
    
    
    
    
    135
    
    
    
    Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,162
    )
    
    
    
    
    
    
    (3,162
    )
    
    
    Balance at June 30,
2007
    
    
    13,047,370
    
    
    $
    131
    
    
    $
    14,599
    
    
    $
    120,453
    
    
    $
    (16,463
    )
    
    $
    1,138
    
    
    $
    119,858
    
    
    $
    (5,548
    )
  5




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 Six Months Ended June 30,2007
    
    
    2006Cash Flows From Operating Activities:Net income (loss)
    
    $
    (5,799
    )
    
    $
    22,974Adjustments to reconcile net income (loss) to net cash used in operating activities:Gain on partial sale of real estate
    
    
    
    
    
    
    (29,968
    )Depreciation and amortization
    
    
    6,856
    
    
    
    9,947Loss from early extinguishment of debt
    
    
    179
    
    
    
    357Amortization of deferred financing costs
    
    
    497
    
    
    
    408Provision for doubtful accounts receivable
    
    
    622
    
    
    
    449Noncash stock compensation
    
    
    289
    
    
    
    389Interest expense (accretion) amortization, net
    
    
    (1,604
    )
    
    
    (1,625
    )Amortization of ground rent
    
    
    176
    
    
    
    68Minority interest
    
    
    (608
    )
    
    
    2,795Equity in loss of unconsolidated real estate partnerships
    
    
    655
    
    
    
    284Net change in revenue related to acquired lease rights/obligations
    
    
    131
    
    
    
    30Change in deferred taxes
    
    
    31
    
    
    
    Other noncash income
    
    
    (2,091
    )
    
    
    Changes in operating assets and liabilities:Rents, deferred rents and other receivables
    
    
    (1,337
    )
    
    
    (1,512
    )Restricted cash relating to operating activities
    
    
    913
    
    
    
    1,211Other deferred costs
    
    
    (450
    )
    
    
    (1,322
    )Other assets, net
    
    
    (605
    )
    
    
    (894
    )Accounts payable, accrued expenses and other liabilities
    
    
    1,127
    
    
    
    (4,388
    )Net cash used in operating activities
    
    
    (1,018
    )
    
    
    (797
    )Cash Flows From Investing Activities:Proceeds from partial sale of real estate, net
    
    
    
    
    
    
    38,905Expenditures for real estate improvements
    
    
    (25,563
    )
    
    
    (12,823
    )Real estate acquisitions, net of assumed liabilities
    
    
    
    
    
    
    (43,235
    )Change in restricted cash relating to investing activities
    
    
    250
    
    
    
    310Advances to unconsolidated real estate partnerships
    
    
    (4,283
    )
    
    
    (181
    )Other
    
    
    
    
    
    
    (880
    )Net cash used in investing activities
    
    
    (29,596
    )
    
    
    (17,904
    )Cash Flows From Financing Activities:Proceeds from junior subordinated debt obligations
    
    
    
    
    
    
    29,380Proceeds from lines of credit
    
    
    13,000
    
    
    
    Proceeds from mortgages and notes payable
    
    
    104,500
    
    
    
    10,000Repayment of mortgages and notes payable
    
    
    (79,021
    )
    
    
    (10,825
    )Payment of deferred financing costs
    
    
    (961
    )
    
    
    (1,367
    )Proceeds from sale of Series A preferred stock, net of issue costs
    
    
    14,764
    
    
    
    Change in restricted cash related to financing activities
    
    
    (24,119
    )
    
    
    (3,028
    )Distributions and dividends
    
    
    (6,623
    )
    
    
    (6,673
    )Net cash provided by financing activities
    
    
    21,540
    
    
    
    17,487Net change in cash and cash equivalents
    
    
    (9,074
    )
    
    
    (1,214
    )Cash and cash equivalents, beginning of period
    
    
    13,036
    
    
    
    14,331Cash and cash equivalents, end of period
    
    $
    3,962
    
    
    $
    13,117Supplemental disclosures of cash flow information:Cash paid during the period for interest, net of amounts capitalized
    
    $
    8,215
    
    
    $
    10,757Supplemental disclosures of noncash investing and financing activities:Accrued renovation costs
    
    
    9,030
    
    
    
    4,436Unrealized gain on derivative instruments
    
    
    251
    
    
    
    1,837Dividends and distributions payable
    
    
    175
    
    
    
    3,343Accrued
financing costs
    
    
    312
    
    
    
    Accrued
preferred stock issuance costs
    
    
    165
    
    
    
    
  6




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 1. Organization and Description of Business
       7




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




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
 Accounting for
Investments in Real Estate Ventures
   Gains on Disposition of Real Estate
   Critical Accounting Policies and Managements Estimates
      9




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
  Cash and Cash Equivalents
  Restricted Cash
  Revenue Recognition and Tenant Receivables
     10




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
  Deferred Charges
  Issuance Costs
  Investments in Real Estate and Depreciation
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest
    
    $
    387
    
    
    $
    176
    
    
    $
    659
    
    
    $
    232Real estate taxes
    
    
    88
    
    
    
    86
    
    
    
    167
    
    
    
    155Insurance
    
    
    7
    
    
    
    9
    
    
    
    15
    
    
    
    16Total
    
    $
    482
    
    
    $
    271
    
    
    $
    841
    
    
    $
    403
   11




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
   June 30, 2007
    
    
    December 31, 2006Buildings and improvements
    
    $
    291,490
    
    
    $
    257,598Tenant improvements
    
    
    20,842
    
    
    
    19,015Furniture, fixtures and equipment
    
    
    7,473
    
    
    
    1,497Construction in progress
    
    
    5,015
    
    
    
    20,685Land
    
    
    34,609
    
    
    
    34,609Total investments in real estate
    
    
    359,429
    
    
    
    333,404Accumulated depreciation
    
    
    (20,164
    )
    
    
    (14,964
    )Investments in real estate, net
    
    $
    339,265
    
    
    $
    318,440
 Conditional Asset Retirement Obligations
  Impairment of Long-Lived Assets
 Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
 Derivative Instruments
    12




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
  Purchase Accounting for Acquisition of Interests in Real Estate Entities
 Business
Combinations
    13




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
    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



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
   Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109
 Earnings (Loss) Per Share
  15




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    (4,935
    )
    
    $
    24,352
    
    
    $
    (5,799
    )
    
    $
    22,974Less preferred stock dividends, net
of minority interest ($17)
    
    
    (158
    )
    
    
    
    
    
    
    (158
    )
    
    
    Net income (loss) available to common
stockholdersbasic
    
    
    (5,093
    )
    
    
    24,352
    
    
    
    (5,957
    )
    
    
    22,974Add back minority interest
    
    
    
    
    
    
    2,962
    
    
    
    
    
    
    
    2,795Net income (loss) attributable to
common stockholdersdiluted
    
    $
    (5,093
    )
    
    $
    27,314
    
    
    $
    (5,957
    )
    
    $
    25,769Basic weighted average common shares
    
    
    12,861,661
    
    
    
    12,801,854
    
    
    
    12,861,633
    
    
    
    12,800,092Plus: weighted average unvested
restricted shares
    
    
    
    
    
    
    297,535
    
    
    
    
    
    
    
    290,839Plus: weighted average OP units
    
    
    
    
    
    
    1,593,464
    
    
    
    
    
    
    
    1,593,464Diluted weighted average common shares
    
    
    12,861,661
    
    
    
    14,692,853
    
    
    
    12,861,633
    
    
    
    14,684,395Basic income (loss) per share
    
    $
    (0.40
    )
    
    $
    1.90
    
    
    $
    (0.46
    )
    
    $
    1.79Diluted income (loss) per share
    
    
    (0.40
    )
    
    
    1.86
    
    
    
    (0.46
    )
    
    
    1.75
 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



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
   Number of Unvested Shares
    
    
    Weighted Average Share Price2007
    
    
    2006
    
    
    2007
    
    
    2006Beginning balance
    
    
    326,074
    
    
    
    285,100
    
    
    $
    11.28
    
    
    $
    11.23Shares granted
    
    
    5,000
    
    
    
    48,030
    
    
    
    11.31
    
    
    
    11.60Shares vested
    
    
    (32,675
    )
    
    
    (40,790
    )
    
    
    12.27
    
    
    
    11.76Shares forfeited
    
    
    (112,692
    )
    
    
    
    
    
    
    9.90
    
    
    
    Ending balance
    
    
    185,707
    
    
    
    292,340
    
    
    
    11.93
    
    
    
    11.23
   Reclassification
  3. Mortgage Loans Payable
  June 30, 2007
    
    
    December 31, 2006Mortgage loan payable  interest only at
115 basis points over LIBOR (6.47% at June
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
    
    
    44,821
    
    
    
    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
    
    
    77,661
    
    
    
    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
    
    
    226,982
    
    
    
    201,503Assumed above-market mortgage premiums, net
    
    
    8,309
    
    
    
    9,948Total mortgage loans payable
    
    $
    235,291
    
    
    $
    211,451
 17




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 3. Mortgage Loans Payable  (Continued)
        2007 (six months)
    
    $
    8252008
    
    
    1,7442009
    
    
    45,1792010
    
    
    105,8242011
    
    
    1,4152012 and thereafter
    
    
    71,995Total principal payments
    
    
    226,982Assumed above-market mortgage premiums, net
    
    
    8,309Total
    
    $
    235,291
 18




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 3. Mortgage Loans Payable  (Continued)
  4. Junior Subordinated Debt Obligation
     5. Secured Line of Credit
     19




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 5. Secured Line of Credit  (Continued)
 $25,000 Credit Facility
    6. Related Party Transactions
   7. Rentals Under Operating Leases
   Year Ending December 31,2007 six months
    
    $
    13,2872008
    
    
    24,1352009
    
    
    21,2632010
    
    
    19,2052011
    
    
    15,9822012 and thereafter
    
    
    63,578Total future minimum base rentals
    
    $
    157,450
 20




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 7. Rentals Under Operating Leases  (Continued)
  8. Due to Affiliates
  9. Stockholders Equity
  Subsequent Events.
    21




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 10. Minority Interest
  11. Commitment and Contingencies
        22




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 12. Investments in Unconsolidated Partnerships
 Foothills Mall
     Harrisburg Mall
    23




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 12. Investments in Unconsolidated Partnerships  (Continued)
    Colonie Center Mall
      24




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 12. Investments in Unconsolidated Partnerships  (Continued)
    June 30, 2007
    
    
    December 31, 2006Investment in real estate, net
    
    $
    287,166
    
    
    $
    257,041Receivables including deferred rents
    
    
    1,884
    
    
    
    5,768Other assets
    
    
    36,953
    
    
    
    31,865Total assets
    
    $
    326,003
    
    
    $
    294,674Mortgage loans payable
    
    $
    210,243
    
    
    $
    181,516Other liabilities
    
    
    36,555
    
    
    
    34,525Owners equity
    
    
    79,205
    
    
    
    78,633Total liabilities and owners equity
    
    $
    326,003
    
    
    $
    294,674The Companys share of owners equity
    
    $
    20,195
    
    
    $
    20,159
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    9,102
    
    
    $
    2,617
    
    
    $
    18,212
    
    
    $
    5,290Operating and other expenses
    
    
    (4,829
    )
    
    
    (1,475
    )
    
    
    (9,973
    )
    
    
    (3,104
    )Interest expense (including
the amortization of deferred
financing costs)
    
    
    (3,132
    )
    
    
    (861
    )
    
    
    (6,191
    )
    
    
    (1,653
    )Depreciation and amortization
    
    
    (2,644
    )
    
    
    (837
    )
    
    
    (5,748
    )
    
    
    (1,670
    )Net loss
    
    $
    (1,503
    )
    
    $
    (556
    )
    
    $
    (3,700
    )
    
    $
    (1,137
    )The Companys share of net loss
    
    $
    (300
    )
    
    $
    (139
    )
    
    $
    (655
    )
    
    $
    (284
    )
  13. Fair Value of Financial Instruments
  25




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
June 30, 2007
(Dollar amounts in thousands, except share and per share data)
 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
    
    
    $
    598Interest Rate Swap
    
    
    75,000
    
    
    
    4.91
    %
    
    
    1/2008
    
    
    
    1/2011
    
    
    
    702Interest Rate Swap
    
    
    29,500
    
    
    
    5.50
    %
    
    
    6/2007
    
    
    
    5/2010
    
    
    
    (207
    )
   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 significantly all of his energy 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
timely financial reporting.
    
    Jim Bourg retains his position as Chief Operating Officer.
    
    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.
 26




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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
   Consolidation of Variable Interest Entities
 27




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##### Table of Contents



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
    Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of
   28




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##### Table of Contents



Gains on Disposition of Real Estate
   Purchase Price Allocation
 Business
Combinations
    Depreciation
  Derivative Instruments
   29




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##### Table of Contents



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. 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 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). Including non-owned
anchors, Golden Triangle is a 765,000 square-foot regional mall.
    
    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 and
matures in April 2008. As of June 30, 2007, the outstanding balance was $13,000.
    
    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 June 30, 2007 to the Three Months Ended June 30, 2006
 Revenues
  Lease Termination
  30




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##### Table of Contents



Expenses
 .
      Other
    Comparison of the Six Months Ended June 30, 2007 to the Six Months Ended June 30, 2006
 Revenues
  31




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##### Table of Contents



Expenses
 .
      Other
    32




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##### Table of Contents



Cash Flows
 Comparison of the Six Months Ended June 30, 2007 to the Six Months Ended June 30, 2006
     Liquidity and Capital Resources
     Short-Term Liquidity
Requirements
   33




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##### Table of Contents



Secured Line of Credit
   Convertible Preferred Equity Financing
    34




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##### Table of Contents



$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(six months)
    
    $
    12,210
    
    
    $
    12,858
    
    
    $
    9,304
    
    
    $
    1,898
    
    
    $
    303
    
    
    $
    36,5732008
    
    
    6,393
    
    
    
    1,372
    
    
    
    18,607
    
    
    
    35,097
    
    
    
    578
    
    
    
    62,0472009
    
    
    
    
    
    
    
    
    
    
    58,079
    
    
    
    1,517
    
    
    
    510
    
    
    
    60,1062010
    
    
    
    
    
    
    
    
    
    
    115,055
    
    
    
    1,517
    
    
    
    429
    
    
    
    117,0012011
    
    
    
    
    
    
    
    
    
    
    8,763
    
    
    
    1,640
    
    
    
    331
    
    
    
    10,7342012 and thereafter
    
    
    
    
    
    
    
    
    
    
    167,745
    
    
    
    31,651
    
    
    
    23,571
    
    
    
    222,967Total
    
    $
    18,603
    
    
    $
    14,230
    
    
    $
    377,553
    
    
    $
    73,320
    
    
    $
    25,722
    
    
    $
    509,428
 
 (1)
    
    Amounts include interest payments based on contractual terms and
current interest rates for variable rate debt. Mortgage Loans
 Northgate Mall
  Tallahassee Mall
  Stratford Square Mall
  Colonie Center Mall Joint Venture
   Foothills Mall Joint Venture
  36




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##### Table of Contents



Harrisburg Mall Joint Venture
    Capital Expenditures
  Off-Balance Sheet Arrangements
 Loan Guarantees
  Forward Swap Contracts
   Tax Indemnifications
   Funds From Operations
  37




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##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss) available to common shareholders
    
    $
    (5,093
    )
    
    $
    24,352
    
    
    $
    (5,957
    )
    
    $
    22,974Add:Depreciation and amortization (excluding FF&E)
    
    
    3,317
    
    
    
    5,454
    
    
    
    6,614
    
    
    
    9,859FFO contribution from unconsolidated joint venture
    
    
    622
    
    
    
    209
    
    
    
    1,247
    
    
    
    388Less:Gain on partial sale of real estate
    
    
    
    
    
    
    (29,968
    )
    
    
    
    
    
    
    (29,968
    )Minority interest
    
    
    (515
    )
    
    
    2,962
    
    
    
    (608
    )
    
    
    2,795FFO available to common stockholders
and OP unit holders
    
    $
    (1,669
    )
    
    $
    3,009
    
    
    $
    1,296
    
    
    $
    6,048
 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
  39




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
       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 Chief Executive Officer pursuant to section 302
of the Sarbanes-Oxley Act of 2002 filed herewith.31.2
    
    
    Certification by the 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: October 30, 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 Chairman of the Board pursuant to section 302
of the Sarbanes-Oxley Act of 2002 filed herewith.31.2
    
    
    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