One of the big questions about the proposed acquisition is why its happening now. But as the report illustrates (which first appeared on our sister site NREI Online), a looming debt deadline played a big part in Mills reaching an agreement.
But the saga isn't over yet. Gazit-Globe, which has been pursuing Mills aggressively since October, upped its recapitalization offer after the Brookfield deal was announced. That means that Mills could change its mind on Brookfield or that Brookfield may eventually be forced to increase its $21 per share offer for the beleagured REIT.
Gazit-Globe, which owns about 9 percent of Mills stock, originally offered Mills $1.2 billion in October, proposing to buy Mills stock and extend the firm new lines of credit. Then on Tuesday-the day before the Brookfield deal was announced-Gazit upped its offer to $21 per share, amounting to $1.8 billion in acquiring stock and new debt, including an offer to refinance the Goldman Sachs loan. Another shareholder, Farallon Partners, which holds 10.9 percent of all Mills shares - offered to buy $499 million of new Mills stock, offering $20 per share. (In October, Farallon had entered into a standstill agreement with Mills.)
Either of the offers could have helped to solve Mills most pressing problem - a March 31 deadline to pay a $1.06 billion mortgage loan from lenders represented by Goldman Sachs Mortgage Co. Farallon's equity was to have been augmented with CMBS proceeds to pay down the loan, while a Gazit-Global share purchase would have paid down the debt and been coupled with a refinancing of the remaining balance with the Royal Bank of Canada.