The Mills Corp. - which built and operates the brightly painted, entertainment-themed Arundel Mills mall - said yesterday that it agreed to buy six more malls around the country for a total of about $621 million.
The deals are expected to close by the end of next month. They will bring to the Arlington, Va.-based real estate investment trust malls in Delaware, Florida, New York, Mississippi, Louisiana and New Jersey.
"It's a big step for them because they are historically ground-up developers," said Craig Schmidt, vice president of equity research for REITS at Merrill Lynch Global Securities in New York.
While Mills typically builds projects and develops them as mega-malls, the new purchases are malls the company will redevelop and add "more entertainment, more lifestyle-type tenants," Schmidt said.
Mills is buying five of the malls from Cadillac Fairview Corp. It is buying the sixth, Riverside Square in Hackensack, N.J., from an undisclosed third party.
Mills is also buying 110 acres of developable land next to the properties.
The malls have an average occupancy rate of 91.3 percent, not including the anchor stores, and total 5.3 million square feet.
In 2001, the malls' average sales per square foot were $370, slightly above average.
The acquisition is expected to bring Mills' funds from operations up 15 cents to 25 cents, to between $3.55 and $3.65 per share for 2003.
Buying the properties, which have been recently renovated, falls in line with part of the company's strategy to expand into more traditional malls, Laurence C. Siegel, Mills chairman and chief executive officer, said during a conference call yesterday.
The malls, along with other development projects, "have in common our ability to create a unique brand of retail excitement and entertainment that can take a traditional mall format and make it an exceptional attraction or create from scratch an exciting new consumer venue," he said.
At the Dover Mall in Dover, Del., for instance, the company plans to add a sports village that will include a NHL-themed ice rink and a mini-NASCAR track. And at the upscale Riverside Square mall in Hackensack, N.J., Mills plans to add a restaurant, a day spa and an art/cinema house.
Mills also said yesterday that it is buying a general partnership interest in two Atlanta malls, a deal that is expected to close within the first half of 2003.
Shares of Mills fell 7 cents to $29.55 yesterday.