##### 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 March 31, 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 
of incorporation or organization)
    
    (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 March 31, 2007
(unaudited) and December 31, 2006
    
    
    3Consolidated Statements of Operations for the
three months ended March 31, 2007 and 2006 (unaudited)
    
    
    4Consolidated Statement of Stockholders
Equity and Comprehensive Loss for the three months ended March 31, 2007
(unaudited)
    
    
    5Consolidated Statements of Cash Flows for the
three months ended March 31, 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
    
    
    38ITEM 4. CONTROLS AND PROCEDURES
    
    
    38PART II. OTHER INFORMATION
    
    
    39ITEM 1. LEGAL PROCEEDINGS
    
    
    39ITEM 1A. RISK FACTORS
    
    
    39ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    39ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    39ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    39ITEM 5. OTHER INFORMATION
    
    
    40ITEM 6. EXHIBITS
    
    
    40Signatures
    
    
    41EX-31.1EX-31.2EX-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)
 March 31, 2007
    
    
    December 31, 2006(Unaudited)ASSETS:Investments in real estate, net
    
    $
    326,105
    
    
    $
    318,440Investment in unconsolidated real estate partnerships
    
    
    34,332
    
    
    
    32,833Cash and cash equivalents
    
    
    1,491
    
    
    
    13,036Restricted cash
    
    
    8,351
    
    
    
    8,159Rents, deferred rents and other receivables, net
    
    
    6,167
    
    
    
    5,718Acquired below-market ground lease, net
    
    
    7,640
    
    
    
    7,674Acquired lease rights, net
    
    
    8,767
    
    
    
    9,262Acquired in-place lease values, net
    
    
    8,364
    
    
    
    10,049Deferred charges, net
    
    
    3,370
    
    
    
    3,284Other assets, net
    
    
    5,191
    
    
    
    5,396Total Assets
    
    $
    409,778
    
    
    $
    413,851LIABILITIES AND STOCKHOLDERS EQUITY:Mortgage loans payable
    
    $
    210,120
    
    
    $
    211,451Junior subordinated debt obligation
    
    
    29,380
    
    
    
    29,380Secured line of credit
    
    
    9,000
    
    
    
    Due to affiliates
    
    
    1,638
    
    
    
    3,891Accounts payable, accrued expenses and other liabilities
    
    
    21,458
    
    
    
    25,832Dividends and distributions payable
    
    
    
    
    
    
    3,315Acquired lease obligations, net
    
    
    6,306
    
    
    
    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
    
    
    285,867
    
    
    
    288,657Minority interest
    
    
    11,556
    
    
    
    11,649Commitments and contingenciesStockholders EquityCommon stock ($0.01 par value, 200,000,000 shares authorized,
13,114,870 and 13,155,062 issued and outstanding at March 31, 2007
and December 31, 2006, respectively)
    
    
    131
    
    
    
    132Additional paid-in capital
    
    
    120,314
    
    
    
    120,163Distributions in excess of earnings
    
    
    (8,455
    )
    
    
    (7,637
    )Accumulated other comprehensive income
    
    
    365
    
    
    
    887Total stockholders equity
    
    
    112,355
    
    
    
    113,545Total Liabilities and Stockholders Equity
    
    $
    409,778
    
    
    $
    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 EndedMarch 31,2007
    
    
    2006Revenue:Rental
    
    $
    7,709
    
    
    $
    10,690Tenant reimbursements
    
    
    3,580
    
    
    
    5,339Management, leasing and development services
    
    
    823
    
    
    
    145Interest and other income
    
    
    2,648
    
    
    
    504Total revenue
    
    
    14,760
    
    
    
    16,678Expenses:Rental property operating and maintenance
    
    
    4,331
    
    
    
    5,524Real estate taxes
    
    
    1,578
    
    
    
    2,052Interest (including amortization of deferred financing costs)
    
    
    3,111
    
    
    
    4,175Depreciation and amortization
    
    
    3,405
    
    
    
    4,446General and administrative
    
    
    2,937
    
    
    
    1,881Total expenses
    
    
    15,362
    
    
    
    18,078Loss from operations
    
    
    (602
    )
    
    
    (1,400
    )Equity in loss of unconsolidated real estate partnerships
    
    
    (355
    )
    
    
    (145
    )Loss before minority interest
    
    
    (957
    )
    
    
    (1,545
    )Minority interest
    
    
    93
    
    
    
    167Net loss
    
    $
    (864
    )
    
    $
    (1,378
    )Basic and diluted loss per share
    
    $
    (0.07
    )
    
    $
    (0.11
    )Basic and diluted weighted average common shares outstanding
    
    
    12,857
    
    
    
    12,798
  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)
 Three months ended March 31, 2007
 Distributions
    
    
    Accumulated OtherNumber of
    
    
    Common
    
    
    Additional Paid-
    
    
    in Excess
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveCommon Shares
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (864
    )
    
    
    
    
    
    
    (864
    )
    
    
    (864
    )Unrealized loss on
derivative
instruments, net of
$7 recorded in
interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (522
    )
    
    
    (522
    )
    
    
    (522
    )Restricted stock
forfeited
    
    
    (40,192
    )
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based
compensation
expense
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    Dividends on
forfeited nonvested
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    46
    
    
    
    Balance at March
31, 2007
    
    
    13,114,870
    
    
    $
    131
    
    
    $
    120,314
    
    
    $
    (8,455
    )
    
    $
    365
    
    
    $
    112,355
    
    
    $
    (1,386
    )




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands)
(Unaudited)
 Three Months Ended March 31,2007
    
    
    2006Cash Flows From Operating Activities:Net loss
    
    $
    (864
    )
    
    $
    (1,378
    )Adjustments to reconcile net income to net cash used in operating activities:Depreciation and amortization
    
    
    3,405
    
    
    
    4,447Amortization of deferred financing costs
    
    
    182
    
    
    
    167Provision for doubtful accounts receivable
    
    
    230
    
    
    
    236Noncash stock compensation
    
    
    150
    
    
    
    190Interest expense (accretion) amortization, net
    
    
    (804
    )
    
    
    (791
    )Amortization of ground rent
    
    
    88
    
    
    
    34Minority interest
    
    
    (93
    )
    
    
    (167
    )Equity in loss of unconsolidated real estate partnerships
    
    
    355
    
    
    
    145Net change in revenue related to acquired lease rights/obligations
    
    
    (22
    )
    
    
    177Change in deferred taxes
    
    
    37
    
    
    
    Other noncash income
    
    
    (2,282
    )
    
    
    Changes in operating assets and liabilities:Rents, deferred rents and other receivables
    
    
    (679
    )
    
    
    (576
    )Restricted cash relating to operating activities
    
    
    (10
    )
    
    
    155Other deferred costs
    
    
    (255
    )
    
    
    (849
    )Other assets, net
    
    
    (194
    )
    
    
    103Accounts payable, accrued expenses and other liabilities
    
    
    (1,145
    )
    
    
    (3,211
    )Net cash used in operating activities
    
    
    (1,901
    )
    
    
    (1,318
    )Cash Flows From Investing Activities:Expenditures for real estate improvements
    
    
    (12,706
    )
    
    
    (4,355
    )Real estate acquisition deposits
    
    
    
    
    
    
    (2,400
    )Change in restricted cash relating to investing activities
    
    
    (182
    )
    
    
    (492
    )Advances to unconsolidated real estate partnerships
    
    
    (1,854
    )
    
    
    (150
    )Other
    
    
    
    
    
    
    (880
    )Net cash used in investing activities
    
    
    (14,742
    )
    
    
    (8,277
    )Cash Flows From Financing Activities:Proceeds from junior subordinated debt obligations
    
    
    
    
    
    
    29,380Proceeds from lines of credit
    
    
    9,000
    
    
    
    Proceeds from promissory note
    
    
    
    
    
    
    5,000Repayment of mortgages and notes payable
    
    
    (527
    )
    
    
    (8,403
    )Payment of deferred financing costs
    
    
    (60
    )
    
    
    (1,151
    )Distributions and dividends
    
    
    (3,315
    )
    
    
    (3,331
    )Net cash provided by financing activities
    
    
    5,098
    
    
    
    21,495Net change in cash and cash equivalents
    
    
    (11,545
    )
    
    
    11,900Cash and cash equivalents, beginning of period
    
    
    13,036
    
    
    
    14,331Cash and cash equivalents, end of period
    
    $
    1,491
    
    
    $
    26,231Supplemental disclosures of cash flow information:Cash paid during the period for interest, net of amounts capitalized
    
    $
    3,948
    
    
    $
    4,694Supplemental disclosures of noncash investing and financing activities:Accrued renovation costs
    
    
    6,109
    
    
    
    1,926Unrealized (loss) gain on derivative instruments
    
    
    (522
    )
    
    
    1,088Dividends and distributions payable
    
    
    
    
    
    
    3,342
  6




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
 (Dollar amounts in thousands, except share and per share data)
 1. Organization and Description of Business
       7




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 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
March 31, 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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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 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
March 31, 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 EndedMarch 31,2007
    
    
    2006Interest
    
    $
    272
    
    
    $
    56Real estate taxes
    
    
    79
    
    
    
    69Insurance
    
    
    8
    
    
    
    7Total
    
    $
    359
    
    
    $
    132
   11




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
   March 31, 2007
    
    
    December 31, 2006Buildings and improvements
    
    $
    265,067
    
    
    $
    259,095Tenant improvements
    
    
    20,473
    
    
    
    19,015Construction in progress
    
    
    23,505
    
    
    
    20,685Land
    
    
    34,609
    
    
    
    34,609Total investments in real estate
    
    
    343,654
    
    
    
    333,404Accumulated depreciation
    
    
    (17,549
    )
    
    
    (14,964
    )Investments in real estate, net
    
    $
    326,105
    
    
    $
    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
March 31, 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
March 31, 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
March 31, 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
 Loss Per Share
  Segment Information
  Recent Accounting Pronouncements
 Fair Value Measurements
 15




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 2. Summary of Significant Accounting Policies  (Continued)
 The Fair Value Option for Financial
Assets and Financial Liabilities
 Share-Based Deferred Compensation
    Number of Unvested Shares
    
    Weighted Average Share Price2007
    
    2006
    
    2007
    
    2006Beginning balance
    
    
    326,074
    
    
    
    285,100
    
    
    $
    11.28
    
    
    $
    11.23Shares granted
    
    
    
    
    
    
    48,010
    
    
    
    
    
    
    
    11.60Shares vested
    
    
    (32,675
    )
    
    
    (33,021
    )
    
    
    12.27
    
    
    
    12.37Shares forfeited
    
    
    (40,192
    )
    
    
    
    
    
    
    (10.51
    )
    
    
    Ending balance
    
    
    253,207
    
    
    
    300,089
    
    
    
    11.27
    
    
    
    11.18
   Reclassification
  16




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 3. Mortgage Loans Payable
  March 31, 2007
    
    
    December 31, 2006Mortgage loan payable  interest only at
125 basis points over LIBOR (6.625% at
March 31, 2007 and December 31, 2006)
payable monthly, due January 2008, secured
by Stratford Square Mall property
    
    $
    75,000
    
    
    $
    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
    
    
    44,952
    
    
    
    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
    
    
    77,919
    
    
    
    78,201Mortgage loan payable  interest at 5.15%
payable monthly, due November 1, 2013,
secured by the JCPenney Parcel at the
Stratford Square Mall
    
    
    3,105
    
    
    
    3,202Total mortgages outstanding
    
    
    200,976
    
    
    
    201,503Assumed above-market mortgage premiums, net
    
    
    9,144
    
    
    
    9,948Total mortgage loans payable
    
    $
    210,120
    
    
    $
    211,451
     $104,500 Stratford Square Refinancing
  17




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 3. Mortgage Loans Payable  (Continued)
  2007
    
    $
    1,5122008
    
    
    77,1602009
    
    
    45,6182010
    
    
    1,7862011
    
    
    1,9012012 and thereafter
    
    
    72,999Total principal payments
    
    
    200,976Assumed above-market mortgage premiums, net
    
    
    9,144Total
    
    $
    210,120
  4. Junior Subordinated Debt Obligation
     18




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 5. Secured Line of Credit
    Increase in the Secured Line of Credit
 6. Related Party Transactions
   7. Rentals Under Operating Leases
   Year Ending December 31,2007 nine months
    
    $
    18,1822008
    
    
    21,9342009
    
    
    19,4092010
    
    
    17,5682011
    
    
    14,9482012 and thereafter
    
    
    47,541Total future minimum base rentals
    
    $
    139,582
 19




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 7. Rentals Under Operating Leases  (Continued)
  8. Due to Affiliates
  9. Stockholders Equity
 Convertible Preferred Equity Financing
 10. Minority Interest
  11. Commitment and Contingencies
   20




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 11. Commitment and Contingencies  (Continued)
     12. Investments in Unconsolidated Partnerships
 Foothills Mall
   21




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 12. Investments in Unconsolidated Partnerships  (Continued)
   Harrisburg Mall
       Colonie Center Mall
  22




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FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 12. Investments in Unconsolidated Partnerships  (Continued)
        March 31, 2007
    
    
    December 31, 2006Investment in real estate, net
    
    $
    272,327
    
    
    $
    257,041Receivables including deferred rents
    
    
    1,498
    
    
    
    5,768Other assets
    
    
    38,893
    
    
    
    31,865Total assets
    
    $
    312,718
    
    
    $
    294,674Mortgage loans payable
    
    $
    197,799
    
    
    $
    181,516Other liabilities
    
    
    35,835
    
    
    
    34,525Owners equity
    
    
    79,084
    
    
    
    78,633Total liabilities and owners equity
    
    $
    312,718
    
    
    $
    294,674The Companys share of owners equity
    
    $
    20,199
    
    
    $
    20,159
 23




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 12. Investments in Unconsolidated Partnerships  (Continued)
  Three Months EndedMarch 31,2007
    
    
    2006Revenue
    
    $
    9,110
    
    
    $
    2,673Operating and other expenses
    
    
    (5,145
    )
    
    
    (1,629
    )Interest expense (including the amortization of deferred financing costs)
    
    
    (3,072
    )
    
    
    (792
    )Depreciation and amortization
    
    
    (3,090
    )
    
    
    (833
    )Net loss
    
    $
    (2,197
    )
    
    $
    (581
    )The Companys share of net loss
    
    $
    (355
    )
    
    $
    (145
    )
  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
    
    
    $
    793Interest Rate Swap
    
    
    75,000
    
    
    
    4.91
    %
    
    
    1/2008
    
    
    
    1/2011
    
    
    
    (388
    )
   15. Subsequent Events
 Convertible Preferred Equity Financing
  24




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 15. Subsequent Events  (Continued)
   $25,000 Credit Facility
    Increase in the Secured Line of Credit
  $104,500 Stratford Square Refinancing
    Dividend
  25




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##### Table of Contents



FELDMAN MALL PROPERTIES, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
March 31, 2007
(Dollar amounts in thousands, except share and per share data)
 15. Subsequent Events  (Continued)
 Lloyd Miller  EVP of Leasing
  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 March 31, 2007, the outstanding balance was $9,000.
    
    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 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.
 Comparison of the Three Months Ended March 31, 2007 to the Three Months Ended March 31, 2006
 Revenues
   30




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##### Table of Contents



Expenses
 .
     Other
  ,
 Cash Flows
 Comparison of the Three Months ended March 31, 2007 to the Three Months ended March 31, 2006
   31




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##### Table of Contents



Liquidity and Capital Resources
 Overview
    Short-Term Liquidity Requirements
    32




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##### Table of Contents



Secured Line of Credit
   Convertible Preferred Equity Financing
   $25 Million Credit Facility
   33




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##### Table of Contents



$104.5 Million Stratford Square Refinancing
   Long-Term Liquidity Requirements
 Long-Term Liquidity Requirements
      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(nine months)
    
    $
    26,543
    
    
    $
    15,007
    
    
    $
    13,151
    
    
    $
    2,681
    
    
    $
    454
    
    
    $
    57,8362008
    
    
    
    
    
    
    1,218
    
    
    
    88,782
    
    
    
    31,846
    
    
    
    578
    
    
    
    122,4242009
    
    
    
    
    
    
    
    
    
    
    53,254
    
    
    
    1,517
    
    
    
    510
    
    
    
    55,2812010
    
    
    
    
    
    
    
    
    
    
    9,313
    
    
    
    1,517
    
    
    
    429
    
    
    
    11,2592011
    
    
    
    
    
    
    
    
    
    
    9,313
    
    
    
    1,640
    
    
    
    331
    
    
    
    11,2842012 and thereafter
    
    
    
    
    
    
    
    
    
    
    168,797
    
    
    
    31,650
    
    
    
    23,571
    
    
    
    224,018Total
    
    $
    26,543
    
    
    $
    16,225
    
    
    $
    342,610
    
    
    $
    70,851
    
    
    $
    25,873
    
    
    $
    482,102
 
 (1)
    
    Amounts include interest payments based on contractual terms and
current interest rates for variable rate debt. 34




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##### Table of Contents



Mortgage Loans
 Northgate Mall
  Tallahassee Mall
  Stratford Square Mall
  Colonie Center Mall Joint Venture
   Foothills Mall Joint Venture
  Harrisburg Mall Joint Venture
    35




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##### Table of Contents



Capital Expenditures
  Off-Balance Sheet Arrangements
 Loan Guarantees
  Forward Swap Contracts
   Tax Indemnifications
   Funds From Operations
  36




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##### Table of Contents



Three Months EndedMarch 31, 20072007
    
    
    2006Net loss
    
    $
    (864
    )
    
    $
    (1,378
    )Add:Depreciation and amortization (excluding FF&E)
    
    
    3,297
    
    
    
    4,404FFO contribution from unconsolidated joint venture
    
    
    625
    
    
    
    180Less:Minority interest
    
    
    (93
    )
    
    
    (167
    )FFO available to common stockholders
and OP unit holders
    
    $
    2,965
    
    
    $
    3,039
 37




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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
  38




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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
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 39




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##### Table of Contents



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.
 40




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##### Table of Contents



SIGNATURES
 
 Date: October 11, 2007
    FELDMAN MALL PROPERTIES, INC.By:
    /s/ Thomas WirthName:
    Thomas WirthTitle:
    Executive Vice President and
Chief Financial Officer