- The Washington Times - Monday, January 7, 2002

Shares of Arlington, Va.-based Mills Corp. rode into 2002 on their highest prices in more than a year. The company, developer of 18 retail shopping centers in the United States and Europe, has shown remarkable post-September 11 resiliency and an improvement in execution, analysts say.
Shares of Mills Corp. opened 2001 below $20 on the New York Stock Exchange, but analysts say that as 2001 went on, investors took note and the company's price gradually increased. Ripple effects from the attacks of September 11 hurt the company, but not for long. Shares of Mills Corp. closed at $xx.xx Friday, a 52-week high.
"Coming into the year, there was a disconnect between the stock price and the company's fundamentals, so it had some catching up to begin with," says Legg Mason analyst Joel Goodman, who rates the stock a "strong buy."
"They took a hit [after September 11] like everyone else, but investors got back on board once they saw the fundamentals weren't deteriorating." Mr. Goodman says.
The company's last earnings report, released on Sept. 30, showed funds from operations to be $29.6 million, up from $25.9 million the year before. Net income from the quarter was $7.2 million, or 28 cents per share.
Like many other developers, Mills Corp. has taken advantage of some positive effects of the economic downturn, including lower costs for building materials and lower interest rates. What's more, many of Mills Corps.' tenants are value-oriented or outlet shops, and can attract shoppers working on a tight budget. The company generated some excitement down south when it opened the 1.2-million-square-foot Discover Mills in suburban Atlanta.
"Shoppers are paying closer attention to their wallets," Mr. Goodman says. "It's a good match in this type of environment."
Although retail sales have been sluggish all year, analysts say Mills Corp. is relatively immune because less than 3 percent of the company's leases or rental agreements include clauses setting rates according to sales figures. And because most tenants have signed long-term leases of 7 to 10 years, Mills Corp. will get its money even if some retailers go under.
At the moment, however, Mills Corp. properties are more than 95 percent occupied, analysts say.
"The tenants are very interested in being there," says Richard Moore, an analyst with McDonald Investments in Cleveland, who rates the stock a "buy."
In a research report released last week, Merrill Lynch analyst Steve Sakwa wrote that he expects the regional mall sector to be a top performer in 2002, and called Mills Corp. a "top pick." He said only the hotel industry bounced back better after September 11.
"We believe that the mall sector will post the strongest returns during 2002 due to their attractive valuations and long-term lease structure," writes Mr. Sakwa, who rates the stock a "near-term buy."
While many regional mall developers, including Mills Corp. have aggressive production plans, analysts say overproduction is unlikely because developers generally don't enter into large projects without a significant amount of pre-leasing.
All this has analysts singing the praises of Mills Corp.

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