Mills Corp. has purchased six malls and one community center for $621 million. Five of the six super-regional malls included in the deal were purchased from Cadillac Fairview. They are: Broward Mall, Ft. Lauderdale, Fla.; Dover Mall, Dover, Del.; Galleria at White Plains, White Plains, N.Y.; Northpark Mall, Jackson, Miss.; and The Esplanade, New Orleans. Mills will also purchase Riverside Square in Hackensack, N.J., from an unrelated third party. Mills will execute the 100 percent interest deal without partners.
In an analysts’ call today, Mills chairman and CEO Larry Siegel estimated that the Cadillac Fairview properties would increase Mills’ FFO revenue by 15 cents to 25 cent per share. Broward Mall is already encumbered by a $62 million mortgage that matures in 2009; Riverside Square will be financed by a 10-year, fixed-rate $65 million mortgage, at an interest rate of approximately 6 percent. The four other malls in the transaction will be financed by variable-rate liens. Goldman Sachs is expected to provide the $320 million in financing at spreads of no greater than 210 basis points. .
Mills COO Ken Parent, explaining the transaction’s attractive cap rate, which is higher than 9 percent, said that the deal "might have fallen under the radar" while "other players were doing other things." .
Mills plans to spend $325 million to $350 million for renovations over the next two to three years in each of the six super-regional properties. .
Among the larger pending changes to the malls is a 375,000-sq.-ft. addition to The Esplanade, which will include a Bass Pro Shops store. A half million square feet will be added to the Dover Mall to include a mini-NASCAR racing track and expanded cinema, too. In the Mills’ other proposed renovations to the portfolio, The Galleria at White Plains will get a new Sears anchor to accompany the existing Macy’s location, as part of a repositioning that complements nearby mall The Westchester; two department stores will be added to Borward Mall, meanwhile. A 10,000-sq.-ft. restaurant, art house cinema, and day spa will be added to Riverside Square, and Northpark Mall will get an ice rink and skate park in addition to restaurants and new specialty stores. .
This is part of Mills continuing expansion in the United States and overseas, where it is building Madrid Xanadu in Spain. Siegel said Mills plans to expand further in Spain and also add centers in Italy. .
Domestically, Millis is developing St. Louis Mills and Cincinnati Mills, both scheduled to open in fall 2003, as well as 110 acres included in the Cadillac Fairview transaction on which Mills will construction 1.6 million sq. ft. The company, says Siegel, is seeking to "take a traditional mall development to make it an exceptional attraction. We’re not buying these malls to content ourselves with the usual tweaking, but to anticipate trends, engage consumers’ imagination, and create exceptional retail and entertainment experiences." .
Echoing that acquisition tactic, the Cadillac Fairview transaction includes a conditional contract for Mills to purchase Town Center at Cobb