Heard on the Floor II

More tidbits gathered at the ICSC National Conference and Dealmaking.

  • Is the end in sight for the The Mills Corp. saga? The company reached an agreement with Gazit-Globe Ltd., an Israeli-based outfit headed by former Equity One CEO Chaim Katzman, to nominate a slate of four nominees for election to Mills' board at its annual meeting, which will be held December 29. The slate will include two new independent directors originally proposed by Gazit, Jon N. Hagan and Keith M. Locker. Mark S. Ordan, Chief Executive Officer and President of The Mills Corporation, will also be nominated to the board. S. Joseph Bruno, a current Mills director and the chairman of The Mills' audit committee, will be re-nominated as part of the agreed slate.

    Hagan serves as a director on the board of Bentall Capital L.P., First Capital Realty Inc., and Sunrise Senior Living Real Estate Investment Trust and on the Advisory Board of Southwest Properties Limited. Hagan previously served as executive vice president and CFO of Canadian mall owner Cadillac Fairview Corp.

    Locker is president of Inlet Capital LLC, a commercial real estate investment and asset management firm. Locker is also president of Global Capital Resources LLC and President of GCR Advisors Inc. Locker was previously a managing director in the real estate investment banking group at Deutsche Bank Securities, Inc. Before that, Locker served in a similar post with Bear, Stearns & Co.

    In addition, Gazit, which has offered to recapitalize Mills up to $1.2 billion, has entered into a confidentiality agreement with The Mills that includes a standstill provision that will last through March 30, 2007.

  • There are murmurs of a brewing shakeup among retail REITs, especially in light of the recent $36 billion deal by Blackstone Group to take Equity Office Properties private. One of the interesting facets of the deal is that Blackstone is funding the acquisition largely through conventional real estate debt (rather than more expensive corporate debt), looking to take out $29 billion in mortgages and mezzanine financing. If the market can absorb that chunk of debt, other buyers could try and ape that strategy to lower their cost of capital.

    Still, some observers are skeptical that privatizations can work in the retail sector as they have with office and multi-family REITs. One person I spoke with pointed to the fact that retail is more management intensive than other sectors and that there aren't enough third party managers for private equity buyers to tap into.

  • Finally, on a sad note, ICSC staffers have been running the show while also dealing with the tragic death of long-time colleague Rich Kokoszka, who died suddenly early Monday morning while on his way to help work the show. Rich had been with ICSC for 13 years and will be remembered for being a kind and gentle man who was always willing to lend a helping hand at ICSC's offices and events.
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