- The Washington Times - Monday, February 5, 2007

The battle over troubled local mall developer Mills Corp. continued yesterday as the largest shopping mall owner in the country offered to buy the company.

Simon Property Group Inc. and Farallon Capital Management LLC, Mill’s largest shareholder, offered $1.56 billion, or $24 per share, to buy Mills, the companies announced yesterday. That figure beats an agreement Mills made last month to be bought by Brookfield Asset Management Inc. for $1.35 billion or $21 per share.

Mills Corp., a Chevy Chase developer, said the agreement with Brookfield is still in effect, but that it will “promptly consider the proposal.”

What makes Mills so valuable, despite recent revelations that executives may have mismanaged funds and that it was running out of money, is its 38 shopping centers across the country.

Locally, it owns Lakeforest Mall in Gaithersburg, Potomac Mills and Potomac Town Center in Prince William County, Marley Station in Glen Burnie, Md., and Arundel Mills in Hanover, Md.

Simon’s offer is cash, meaning shareholders could receive payment six months before they would under a Brookfield deal, the company said.

Simon Property Group is an Indianapolis real estate investment trust that owns the Fashion Centre at Pentagon City, Bowie Town Center, Leesburg (Va.) Corner Premium Outlets and St. Charles (Md.) Towne Center.

Simon said its experience would make it most qualified to run the Mills properties.

A Brookfield spokeswoman declined to comment on the competing bid.

Wall Street analysts yesterday were hesitant to issue opinions on the proposal because Mills’ financial situation is unknown. Amid its financial troubles, Mills still hasn’t filed its 2005 financial statement.

“Without current financial statements it is impossible to assess the impact on [Simon’s] bottom line from this transaction and the real question is whether it is worth the ‘brain damage’ to acquire a troubled company and invest the next several years trying to turn it around,” Merrill Lynch analyst Steve Sakwa said in a note to investors.

Merrill Lynch is acting as Simon’s financial adviser in its proposed acquisition.

Mr. Sakwa pointed out that Mills’ assets are a mixed bag, from desirable properties such as shopping centers in Northern New Jersey and Northern California to less desirable centers such as the Mills malls in Cincinnati and Colorado.

Wachovia Capital Markets LLC analyst Jeffrey J. Donnelly said he is skeptical without a financial picture but said Simon is a “logical buyer” for Mills.

Farallon Capital Management, which owns nearly 11 percent of Mills’ shares, had been furiously looking for someone to save the embattled Mills.

The San Francisco hedge fund originally offered $20 per share in a recapitalization plan. Then it submitted a bid with fellow shareholder Gazit-Globe Ltd., an Israeli real estate company, for $22 per share. Now, it is working with Simon.

Mills’ stock rose nearly 17 percent to close at $25.87 on the New York Stock Exchange.

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