UPDATE: Simon might upgrade Mills malls

February 13, 2007

Simon Property Group probably will improve Mills Corp. malls if the Chevy Chase, Md., company follows through with its announcement earlier today and accepts Simon’s $1.56 billion buyout offer, an RBC Capital Markets analyst said.

Speaking to Bloomberg, Rich Moore said Indianapolis-based Simon—the nation’s largest mall owner—brings substantial economies of scale.

“Simon will get tenants, upgrade tenants or put the Mills properties through renovations,” Moore told Bloomberg.

Simon made the offer in partnership with the San Francisco hedge fund Farallon Capital Management LLC.

Simon’s unsolicited bid is higher than the $1.35 billion offered by Toronto-based Brookfield Capital Management Inc.

Mills said it has authorized its board to terminate its agreement with Brookfield if Brookfield does not counter within three days.

Mills is concentrated in ritzy, entertainment-focused malls. In early January, the company revealed accounting errors and official misconduct that it said might drive it into bankruptcy.

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