(To read more on the debt and equity markets, click here.)
ARLINGTON, VA-Goldman Sachs Mortgage Co. is providing the Mills Corp. with up to $2.23 billion in financing--most of which will be used to pay off portions of the retail REIT's debt. About $385 million will go toward "working capital requirements and general corporate purposes," according to a company statement.
The company has been exploring a sale and is under investigation by the SEC for accounting flaws. Mills, the owner of 42 shopping centers in North America and Europe, is restating its financials from 2000 through last year after its third-quarter NOI and FFO dropped due to the failure to collect rents, charges on projects under construction and other factors.
Mills' management says it will continue to explore strategic alternatives for the company. So far Vornado Realty Trust, the Westfield Group and other large mall owners have expressed interest in potentially making an offer. For previous coverage, click here.
A Bank of America Equity Research report on the Goldman deal speculates that Mills management and its board may no longer want to sell the company believe that this will allow the firm to recover. Or "the company is trying to gain additional flexibility and liquidity so as not to portray to potential buyers the desperation to sell and thereby potentially garner a higher bid."
Last month JP Morgan provided the company with a $625-million mortgage on Sawgrass Mills, a center in Sunrise, FL, to replace a $268-million mortgage and $74 million in mezzanine financing. Executives expect to generate about $246 million in proceeds from the deal.
Mills' management also plans to refinance its Madrid (Spain) Xanadu and Vaughan (Ontario) Mills centers. The refinancing and access to its credit line will allow it to pursue its current developments, says Laurence Siegel, the company's chairman and chief executive officer. Among the major projects it has in the pipeline are Meadowlands Xanadu in East Rutherford, NJ and 108 N. State St. in Chicago.
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