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     We intend to maintain a flexible financing position by maintaining a prudent level of leverage consistent with the level of debt typical in the mall industry. We intend to finance our acquisition, renovation and repositioning projects with the most advantageous source of capital available to us at the time of the transaction including traditional floating rate construction financing. We expect that once we have completed our renovation and repositioning of a specific mall asset, we will replace construction financing with medium to long-term fixed rate financing.

     Short Term Liquidity Requirements

     Our short term liquidity needs include funds to pay dividends to our stockholders required to maintain our REIT status, distributions to unit holders in our operating partnership funds for capital expenditures and, potentially, acquisitions. We expect to meet our short-term liquidity requirements generally through net cash provided by operations and our existing cash. Our properties require periodic investments of capital for tenant-related capital expenditures and for general capital improvements. As of September 30, 2005, we had commitments to make tenant improvements and other capital expenditures at our properties in the amount of approximately $773,000 to be incurred during 2005, which we intend to fund from existing cash and cash from operating activities. We expect the cost of recurring capital improvements and tenant improvements for our properties to be approximately $2.0 million for the remainder of 2005. We believe that our net cash provided by operations and our available cash and restricted cash will be adequate to fund operating requirements, pay interest on our borrowings and fund distributions in accordance with the REIT requirements of the federal income tax laws.

     In addition, as of September 30, 2005, the joint venture owning the Harrisburg Mall had commitments to make tenant improvements and other capital expenditures in the amount of $539,000 to be incurred in 2005. The joint venture intends to fund these commitments from operating cash flow and approved state and local government grants and other economic incentives (approximately $8.0 million of which $7.5 million has been received through September 30, 2005). Loan advances under the construction loan, however, are reduced by the amount of the Harrisburg Mall joint venture’s net cash flow after operating expenses and debt service. In April 2005, the loan was extended until March 2008. During July 2005, the loan was amended and increased to $50 million through a $7.2 million second mortgage with no principal payments due until the maturity date. The interest rate on both the first and second mortgages has been reduced to LIBOR plus 1.625% per annum. During July 2005, the borrowings were increased to $49.8 million and a distribution of $6.5 million was made to the partners on a pro rata basis of which our Company received $1.625 million. The Company does not anticipate further distributions or capital requirements for the remainder of 2005.

     In June 2005, the Company completed a $50.8 million first mortgage bridge financing collateralized by the Colonie Center Mall. At September 30, 2005, the Company did not satisfy two financial covenants and has received a temporary waiver from the financial institution. The Company plans to replace the bridge loan with a three to five year first mortgage loan prior to the December 2005 maturity date.

     In connection with the Company’s acquisition of the Colonie Center Mall, the purchase price was initially subject to increase up to an additional $9 million if, prior to June 30, 2005, certain pending leases in negotiation at the time of acquisition were obtained by the seller of the mall that complied with certain criteria.  The Company has disbursed $382,000 in connection with one lease that met the foregoing criteria.  The Company also received from the seller on June 30, 2005 a lease that the Company declined to sign on July 1, 2005 because the Company does not believe that the lease complied with the requirements of the purchase contract. The seller has responded to the Company’s July 1, 2005 action by requesting an arbitration hearing under the terms of the agreement.  Although the Company believes that the seller has no legal basis for objecting to the Company’s action, if an arbitrator determines the issue adversely to the Company, the Company would be obligated to pay approximately $4 million to the seller, which would be considered additional purchase price related to the acquisiton and allocated to tangible and intangible assets accordingly. 

     Long Term Liquidity Requirements

     Our long-term liquidity requirements consist primarily of funds necessary for acquisition, renovation and repositioning of new properties, non-recurring capital expenditures and payment of indebtedness at maturity. We expect to meet our other long-term liquidity requirements through net cash from operations, existing cash, additional long-term secured and unsecured borrowings and the issuance of additional equity or debt securities and contributing certain wholly-owned properties into joint ventures.

     In the future, we may seek to increase the amount of our mortgages, negotiate credit facilities or issue corporate debt instruments. Any debt incurred or issued by us may be secured or unsecured, long-term or short-term, fixed or variable interest rate and may be subject to such other terms as we deem prudent.

     While our charter does not limit the amount of debt we can incur, we intend to maintain a flexible financing position by maintaining a prudent level of leverage consistent with the level of debt typical in the mall industry. We will consider a number of factors in evaluating our actual level of indebtedness, both fixed and variable rate, and in making financial decisions. We intend to finance our acquisition, renovation and repositioning projects with the most advantageous source of capital available to us at the time of the transaction, including traditional floating rate construction financing. We expect that once we have completed our renovation and repositioning of a specific mall asset we will replace construction financing with medium to long-term fixed rate financing. In addition, we may also finance our activities through any combination of sales of common or preferred shares or debt securities, additional secured or unsecured borrowings and our proposed line of credit.

     In addition, we may also finance our acquisition, renovation and repositioning projects through joint ventures with institutional investors. Through these joint ventures, we will seek to enhance our returns by supplementing the cash flow we receive from our properties with additional management, leasing, development and incentive fees from the joint ventures. We may also acquire properties in exchange for units in our operating partnership.

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