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CHEVY CHASE, MD-Israeli real estate firm Gazit-Globe has acquired 9% of the outstanding common stock, or 5.1 million shares, of troubled retail REIT the Mills Corp., according to an SEC filing. Gazit-Globe executives say they are willing to spend $1.2 billion to recapitalize the mall owner, which has shot up in trading by nearly 16%, to close to $20 per share.

Mills' management is exploring strategic alternatives, including a sale of the company, after higher-than-expected development costs and accounting regularities that have led to an SEC investigation as well as the sale of its foreign malls. Gazit-Globe's chairman Chaim Katzman says that Mills should not sell. "We believe Mills can and should be rebuilt," he asserts in a statement.

Gazit's SEC filing says that it is willing to invest the $1.2 billion through preferred stock at a price per share of $24.50. Through existing funds, it has $700 million to invest in Mills. The Royal Bank of Canada will provide additional financing, the filing says.