Jones Lang LaSalle
Financial problems mount for troubled Mills Corp.
Potential takeover unlikely as analysts cut stock
Wednesday, March 22, 2006
BY MATTHEW FUTTERMAN
Star-Ledger Staff
Last month, officials at the New Jersey Sports and Exposition Authority insisted the troubled lead developer of the Xanadu retail and entertainment center in the Meadowlands had made it through the worst of its financial difficulties.
This week, however, the problems for the Mills Corp. of Virginia have gone from worse to dreadful.
During the past four days, analysts downgraded the company's stock, shares dropped to a 52-week low and industry experts warned anyone hoping for a quick exit strategy through a takeover is going to be disappointed, since Mills executives now won't say when they will be able to deliver accurate financial results for the past five years.
State officials had cited a potential takeover of Mills by a solid real estate company as a way to ensure that the $1.3 billion project would get built.
"You don't have to be a genius to know what is going on," said Raymond Bateman, one of two sports authority commissioners, who voted against the controversial Xanadu project two years ago. "They're hustlers, and that goes way back to when they were buying every lobbyist in the state to get what they were after."
Mills executives, who partnered with Mack-Cali Realty of Cranford on the Xanadu project, did not return phone calls seeking comment, continuing its practice of doing nearly all their talking through occasional filings with U.S. Securities and Exchange Commission.
In its latest filing Friday, the company announced it would miss both its March 16 target date to re-state its earnings from 2000 to 2004 as well as the March 31 deadline to release its results from last year.
In response, Citigroup analyst Jonathan Litt downgraded the stock to "sell," from "hold," and Banc of America analyst Ross Nussbaum followed suit Monday, dropping his target price on the stock to $30, from $40, and warning it could go as low as $25.
"We continue to believe that a near-term sale of Mills is unlikely, given the absence of audited 2005 financials, the SEC inquiry, lawsuits, and uncertain outlook for Meadowlands Xanadu," Nussbaum wrote in a report to investors.
Mills shares have lost 20 percent of their value this week alone, and are down 50 percent from a year ago.
Carl Goldberg, the sports authority's chairman and one of the biggest boosters of the Xanadu project, said yesterday the company's dwindling share price was not directly related to the future of Xanadu. He said he remains optimistic, though vigilant, about Mills' prospects.
Goldberg said if the company has any hope of completing Xanadu it must begin signing leases for the project, which can then be used as collateral to gain the necessary construction financing to complete the job.
The problem for Mills, however, is retailers may resist signing long-term leases with an unstable company. And without the leases, Mills won't have enough money to complete a project that is supposed to include North America's first indoor ski mountain, a minor league ballpark, a hotel and dozens of high-end stores and restaurants.
"If they don't, we all recognize the increasingly more difficult prospect of securing construction financing," Goldberg said. "The single-most important thing is leasing activity. Everything we talk about becomes increasingly problematic if they are not successful in getting leases."
So far, Mills has signed just four leases and has made little progress on the entertainment venues that helped Xanadu beat out competitors for the sports authority property.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
Financial problems mount for troubled Mills Corp.
Potential takeover unlikely as analysts cut stock
Wednesday, March 22, 2006
BY MATTHEW FUTTERMAN
Star-Ledger Staff
Last month, officials at the New Jersey Sports and Exposition Authority insisted the troubled lead developer of the Xanadu retail and entertainment center in the Meadowlands had made it through the worst of its financial difficulties.
This week, however, the problems for the Mills Corp. of Virginia have gone from worse to dreadful.
During the past four days, analysts downgraded the company's stock, shares dropped to a 52-week low and industry experts warned anyone hoping for a quick exit strategy through a takeover is going to be disappointed, since Mills executives now won't say when they will be able to deliver accurate financial results for the past five years.
State officials had cited a potential takeover of Mills by a solid real estate company as a way to ensure that the $1.3 billion project would get built.
"You don't have to be a genius to know what is going on," said Raymond Bateman, one of two sports authority commissioners, who voted against the controversial Xanadu project two years ago. "They're hustlers, and that goes way back to when they were buying every lobbyist in the state to get what they were after."
Mills executives, who partnered with Mack-Cali Realty of Cranford on the Xanadu project, did not return phone calls seeking comment, continuing its practice of doing nearly all their talking through occasional filings with U.S. Securities and Exchange Commission.
In its latest filing Friday, the company announced it would miss both its March 16 target date to re-state its earnings from 2000 to 2004 as well as the March 31 deadline to release its results from last year.
In response, Citigroup analyst Jonathan Litt downgraded the stock to "sell," from "hold," and Banc of America analyst Ross Nussbaum followed suit Monday, dropping his target price on the stock to $30, from $40, and warning it could go as low as $25.
"We continue to believe that a near-term sale of Mills is unlikely, given the absence of audited 2005 financials, the SEC inquiry, lawsuits, and uncertain outlook for Meadowlands Xanadu," Nussbaum wrote in a report to investors.
Mills shares have lost 20 percent of their value this week alone, and are down 50 percent from a year ago.
Carl Goldberg, the sports authority's chairman and one of the biggest boosters of the Xanadu project, said yesterday the company's dwindling share price was not directly related to the future of Xanadu. He said he remains optimistic, though vigilant, about Mills' prospects.
Goldberg said if the company has any hope of completing Xanadu it must begin signing leases for the project, which can then be used as collateral to gain the necessary construction financing to complete the job.
The problem for Mills, however, is retailers may resist signing long-term leases with an unstable company. And without the leases, Mills won't have enough money to complete a project that is supposed to include North America's first indoor ski mountain, a minor league ballpark, a hotel and dozens of high-end stores and restaurants.
"If they don't, we all recognize the increasingly more difficult prospect of securing construction financing," Goldberg said. "The single-most important thing is leasing activity. Everything we talk about becomes increasingly problematic if they are not successful in getting leases."
So far, Mills has signed just four leases and has made little progress on the entertainment venues that helped Xanadu beat out competitors for the sports authority property.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 9:17 AM
<< Home