Inlet Track Record: Mills Corp., Retail Mall REIT

Opportunity:

Underperforming retail mall REIT. 38 properties, 47 million square feet. Regional malls and entertainment centers. Public REIT since 1994: NYSE: MLS

• Company announced January 2006 that prior five years earnings would be restated.
• SEC investigation announced January 2006.
• “Possible Misconduct” Intentional Management Misconduct.
• Accounting errors “not in good faith”.
• The opportunity was originated through a close and longstanding relationship with Gazit, a close working knowledge of the public and private markets and the value added retail sector.

Transaction:

• Auction process of company hindered by lack of financial statements.
• Investigation by forensic accountants revealed $347 to $352 million of accounting restatements needed including $227 million of capitalized costs that should have been expensed.
• Mills Corp acquired by Simon Property Group (NYSE: SPG) and Farrallon.
• Purchase Price: $1.64 billion (including debt), $25.25 / Share (Announced February 16, 2007).
• Keith Locker appointed independent director December 5, 2006 as part of Gazit-Globe Ltd slate. Served as director through auction process and close of sale to SPG.
• As independent Director, Mr. Locker participated in auction process within MLS board to retain advisors, examine options, market the company, and select purchaser.