The purchase is expected to be financed through the assumption of $170 million of existing property debt and approximately $377 million from new mortgages on Briarwood, Meadowood, Stoneridge and The Falls. The balance will be paid in cash, to be generated from a variety of sources, including the Company's recently announced fundings from joint ventures at Meadowlands Xanadu and Ontario Mills, a fully underwritten debt facility of up to $500 million led by JPMorgan and other potential public and private equity and financing sources. Management expects the acquisition to be accretive to 2004 and 2005 Funds from Operations (FFO) per share.
Based on the purchase price, The Mills expects to realize an unlevered return of approximately 6.4% prior to any significant remerchandising or expansion efforts currently being contemplated for the properties. The agreement is subject to customary closing conditions and the transaction is expected to close on or before October 15, 2004.
The properties total approximately 9.6 million square feet of gross leasable area, including non-owned department stores, and had reported tenant sales in 2003 of approximately $2.1 billion. Excluding Columbus City Center, which is a redevelopment project, occupancy for the portfolio is 86% and in-line tenant-reported sales productivity was $392 per square foot for the trailing 12 months ended June 30, 2004.
Laurence C. Siegel, The Mills chairman and chief executive officer, said, "We are acquiring these properties because of their high quality, attractive yields and potential for increased productivity. We will enhance our return by leveraging our substantial merchandising and development expertise."
Thomas E. Dobrowski, Managing Director, Real Estate & Alternative Investments at GMAM, said, "We selected The Mills as our partner in these assets because of its development expertise, retail innovation and strong management team. The Mills has a track record of optimizing the value of its assets and together we will share in the success of this partnership." GMAM was advised by AEW Capital Management, L.P. in this transaction.
The portfolio consists of strong-performing properties with expansion and remerchandising opportunities. Highlights of the portfolio include:
Stoneridge Mall dominates the Tri-Valley region of San Francisco's East Bay, an affluent and populous area with one of the highest population growth rates in California. Stoneridge is strategically located at the intersection of I-680 and I-580, the region's primary north-south and east-west interstates. The primary trade area has a population of more than half a million with average household income exceeding $105,000. Anchors include Nordstrom, Macy's, JCPenney and Sears, and in-line tenants include Talbots, Victoria's Secret, J. Crew, Gap, Banana Republic, Hollister, Abercrombie & Fitch, Pottery Barn, Williams-Sonoma and Montblanc. In-line sales were $491 per square foot for the trailing 12 months ended June 30, 2004. Stoneridge has vested development rights for approximately 380,000 additional square feet.
The Falls is an open-air regional mall that targets the higher-end shopper and dominates its trade area in south Dade County, Florida. It has posted gains in in-line sales productivity, growing from $399 per square foot in 2001 to $466 per square foot for the trailing 12 months ended June 30, 2004. The Falls' anchors are Bloomingdale's and Macy's and tenants include The Apple Store, Coach, Crate & Barrel, Pottery Barn, Brooks Brothers and Ann Taylor. The Falls' primary trade area has a population of more than 330,000 with average household income exceeding $80,000. The center has vested development rights for approximately 779,000 additional square feet.
Meadowood is the dominant shopping center in fast-growing Reno, Nevada. The population of Meadowood's primary trade area increased 41% from 1990 to 2003 and now is at 320,000. Sales per square foot have grown from $417 in 2002 to $444 for the trailing 12 months ended June 30, 2004. The center's anchors include Macy's, Macy's Men/Home, JCPenney and Sears, while in-line tenants include Ann Taylor, Cache, Sharper Image, Bailey, Banks & Biddle, Gap, American Eagle Outfitters and Copeland's Sports. The center has vested development rights for approximately one million additional square feet.
Highlights of the properties include the following: Property Market Size In-line GLA -------- ------ ---- ----------- Stoneridge Mall Pleasanton, CA 1.3 million sq. ft. 443,000 sq. ft. Columbus City Center Columbus, OH 1.2 million sq. ft. 389,000 sq. ft. Lakeforest Mall Gaithersburg, MD 1.1 million sq. ft. 418,000 sq. ft. The Mall at Tuttle Crossing Columbus, OH 1.1 million sq. ft. 379,000 sq. ft. Marley Station Anne Arundel County, MD 1.1 million sq. ft. 365,000 sq. ft. Hilltop Mall W. Contra Costa County, CA 1.1 million sq. ft. 373,000 sq. ft. Briarwood Mall Ann Arbor, MI 982,500 sq. ft. 361,000 sq. ft. Meadowood Mall Reno, NV 900,000 sq. ft. 322,000 sq. ft. The Falls Miami, FL 821,000 sq. ft. 364,000 sq. ft.
About General Motors Asset Management
GMAM, a wholly-owned subsidiary of General Motors Corporation (GM), is the holding company for certain investment advisors and fiduciaries affiliated with GM ("affiliates"). GMAM, including its predecessors, has roots spanning more than 50 years in investment management and, through its affiliates, currently manages over $148 billion in total assets for affiliated and unaffiliated clients. GMAM offers various levels of service including comprehensive management of benefit plan investments across a wide spectrum of both traditional and non-traditional asset classes. GMAM manages real estate portfolios with a current total equity value in excess of $7.5 billion.
About The Mills Corporation
The Mills Corporation is a self-managed real estate investment trust (REIT) based in Arlington, Va. that owns, develops, leases, manages and markets a portfolio of 27 retail and entertainment destinations totaling approximately 34 million square feet. Currently, the Company has eight projects under construction or development around the world. The company's Internet address is www.themills.com.
Note: The Mills Corporation will conduct a conference call to discuss the transaction today at 10:00 A.M. Eastern Daylight Time. The Mills Corporation will provide an online simulcast of the call at www.themills.com. To listen to the live call, please go to The Mills Corporation's website at least fifteen minutes prior to the call to register, download and install any necessary audio software. An online replay will be available for approximately 90 days at www.themills.com/investors. Additional information on the nine properties in the transaction can be found on The Mills Corporation website at www.themills.com/investors.
Statements in this press release that are not historical may be deemed forward-looking statements within the meaning of the federal securities laws. Although The Mills Corporation believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that their expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K for a discussion of such risks and uncertainties.