Shopping-Mall REIT Mills
Hires Advisers to Explore Sale
Real-estate investment trust Mills Corp. has hired two investment banks to look into a possible sale of all or part of the company, according to a person familiar with the situation.
The mall REIT, whose stock has dropped 36% from its 52-week high in August, has hired J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. to explore such a sale.
A Mills spokesman declined to comment.
Mills, which owns 42 malls and is based in Arlington, Va., has been rocked during the past year by two accounting restatements, a delayed earnings announcement, the cancellation and $71 million write-off of 10 projects, a run on a major partner's funds, shareholder lawsuits, and an informal Securities and Exchange Commission inquiry.
Its shares languish below the value of its assets, though yesterday Mills shares jumped 8.7%, or $3.37, to $42.22 in 4 p.m. composite trading on the New York Stock Exchange on the news, reported in The Australian newspaper, that the company had hired advisers.
The company, which has a market capitalization of about $2.39 billion at yesterday's closing price, is known for its Landmark brand of malls, which it styles "shoppertainment"; they combine outlet and specialty stores with more entertainment draws than a typical mall. Mills has a portfolio that includes 18 traditional malls, which may be valued at more than its 22 Landmark malls. Mills also has a pipeline of developments, including the $1.2 billion Xanadu project at the Meadowlands in New Jersey, near New York City.
"There are some very high-quality properties in the [traditional-mall] portfolio," said Rich Moore, an analyst with KeyBanc Capital Markets in Cleveland. "Then they've got a lot of properties that are the Mills-specific properties -- 'shoppertainment.' Those by and large are not going to be as attractive to any of the traditional mall guys. It's just not what they do."
Of public REITs, Simon Property Group Inc., of Indianapolis, may have the most reason to buy Mills's Landmark properties, since it owns Chelsea Property Group, the biggest outlet-mall company, analysts say.
-- Jennifer S. Forsyth contributed to this article.
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