The financially troubled owner of Lakewood’s Colorado Mills mall agreed Wednesday to a buyout offer from the owner of New York’s World Financial Center.
Brookfield Asset Management Inc. will pay $1.35 billion for the outstanding common stock of Chevy Chase, Md.- based Mills Corp. Including assumed debt and preferred stock, the companies valued the deal at $7.5 billion.
Locally, Brookfield owns the Republic Plaza office building downtown. The company will merge into a newly formed subsidiary of Toronto-based Brookfield.
Mills owns 38 U.S. regional shopping malls. The company was verging on bankruptcy and had been under investigation for its accounting practices.
In a federal filing issued last week, the company said accounting errors could decrease shareholder equity by $347 million to $352 million. It also warned that it could be forced into bankruptcy if it wasn’t able to sell all or part of its business in time to make a March loan payment.
Colorado Mills has met its projected sales goals but has proved a disappointment to Lakewood city leaders, who say the company never delivered the type of tenants it promised and was too consumed by its internal problems to focus on the center.
Lakewood City Manager Mike Rock said the city was pleased to see Brookfield taking over the Mills Corp.
“We are confident that they’ll bring not only an infusion of cash but an infusion of good management and expertise,” Rock said. “We think they’ll work hard to keep the best of the Mills staff and make changes where appropriate.”
Brookfield spokeswoman Katherine Vyse said the company views Mills as an attractive opportunity for building its retail platform. She said it is premature to speculate on any changes at Colorado Mills.
Prior to announcing the Brookfield deal, Mills had received offers from Farallon Capital Management and Israeli real-estate firm Gazit-Globe. Both are shareholders who aimed to recapitalize the company to prevent it from being sold for a low price. Gazit-Globe raised its offer Wednesday, but the Brookfield offer is close to the other companies’ offers.
Analyst Rich Moore of RBC Capital said there likely were other bidders but that Gazit’s raised offer, set to expire Friday, likely won’t be accepted or prompt a bidding war. Other mall developers could try to raise it, but Brookfield’s offer seems solid, he said.
“When you have an all-cash offer … that is going to take precedence over other options out there,” said Moore, whose firm had advised Gazit on its original offer.
The Brookfield deal has been approved by the company’s board of directors but must be approved by shareholders.
If the deal goes through, Rock predicted, the mall will likely see renewed leasing activity. Greg Stevinson, whose family is a silent partner in Colorado Mills, has similar expectations.
“I think you’ll see an aggressive approach being taken to analyze and reposition a lot of the properties,” he said. “You don’t make the investment Brookfield has made without looking to enhance value for shareholders.”
Stevinson described the deal as “great news” for Colorado Mills.
“This period of limbo they’ve been in is quickly drawing to a close,” he said.
Mills was considered a leader in the mall-development industry, and its malls often ranked as top tourist attractions in the states where they were built.
It plunged into financial disarray following a period of rapid growth and encountered massive cost overruns on large projects, including the planned $2 billion Meadowlands Xanadu mall in northern New Jersey.
The Associated Press contributed to this report.
Staff writer Kristi Arellano can be reached at 303-954-1902 or karellano@denverpost.com.
