Inlet Track Record: Mills Corp., Retail Mall REIT


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.


  • 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.
Mills Corp Project


  • Purchase price was 66% premium over January 15, 2007 price and a 21.3% premium over the one-year average price.
  • $25.25 sale at 6-70% premium to NAV: Management NAV: $14.89 to $23.85.
  • Premium value for shareholders obtained through active management of sale process resulting in sale to public REIT.

Back to Case Studies