NEW YORK -- Mills Corp., a real estate investment trust, on Tuesday said it agreed to buy a 50 percent managing stake in nine regional malls from General Motors' General Motors Asset Management Corp. unit for about $1.033 billion, before transaction costs.
Mills' chief executive, Laurence Siegel, said Mills is buying the properties because of their "high quality, attractive yields and potential for increased productivity."
The Arlington, Va.,-based trust operates 27 properties with about 34 million square feet, and has eight other projects under construction or development.
The nine properties include two malls in Columbus, Ohio, and single malls in Pleasanton, Calif.; Gaithersburg, Md.; Anne Arundel County, Md.; West Contra Costa County, Calif.; Ann Arbor, Mich.; Reno, Nev., and Miami.
Mills said it is acquiring a managing member LLC, or limited liability company, interest in the properties. "We will be managing the properties, and receiving management fees for doing so," said Mills spokesman David Douglass.
Mills said the properties include about 9.6 million square feet of leasable space. It said 86 percent is occupied, excluding the Columbus City Center, which is being redeveloped. Reported tenant sales in 2003 totaled about $2.1 billion, it said.
Mills said it expects to finance the purchase with cash, $377 million from new mortgages on four of the properties, and the assumption of $170 million of existing debt. It said the cash will come from various joint ventures, a $500 million debt facility arranged by J.P. Morgan, and other sources.
Mills expects the transactions to close by Oct. 15 and add to 2004 and 2005 per-share funds from operations, a common measure of REIT profitability. The GM unit was advised by AEW Capital Management LP on the transaction, Mills said.