Saturday, August 12, 2006

wall street journal zu mills / kanam

aus dem wsj von heute / samstag

immobilienblasen: mills corp / mls kanam und scope

immobilienblasen: update KANAM / MILLS "XANADOUBTS

Mills's Troubles Deepen as DeveloperPlans to Write Down Shareholder Equity

By RYAN CHITTUMAugust 12, 2006

Mills Corp., the troubled mall developer that has been reviewing its accounting for nearly a year, announced plans to write down as much as $315 million in shareholder equity, detailed a litany of accounting problems and acknowledged that it would cost $800 million more than expected to complete its New Jersey mega-mall. (ist das xanadu objekt)

The company also said its auditors questioned whether Mills can continue to operate as a going concern, although analysts said the company could raise cash through a sale or recapitalization.

The disclosures, detailed in a filing late Thursday with the Securities and Exchange Commission, sent shares of the Chevy Chase, Md., company plunging $6.68, or 30%, to $15.91, in 4 p.m. trading on the New York Stock Exchange, a six-year low.

A spokesman for Mills declined to comment. But in the SEC filing, the company cited problems in eight separate accounting areas, including erroneously capitalizing predevelopment costs. Mills said restatements related to these accounting issues will erase some $210 million in earnings going back to 2003.

Mills, whose accounting practices have been under investigation by the SEC, said it expects to write down the value of two of its most-recent mall projects, Cincinnati Mills and Pittsburgh Mills, as well as a mall in Columbus, Ohio, it purchased a few years ago. It added that it will write down $295 million to $315 million in shareholder equity.

The developer confirmed rumors that the price tag of its troubled Xanadu mega-mall project in the Meadowlands of New Jersey has soared to $2 billion from $1.2 billion. The disclosure intensifies doubts surrounding the ambitious plan to build a retail and entertainment destination in the New York City suburbs.( jetzt sind die $2 billionen bestätigt)

Mills and its partners KanAm Group of Germany and Mack-Cali Realty Corp. of Cranford, N.J., have poured about $800 million already into the project, and are required to pay for its completion themselves if financing can't be obtained.

The Xanadu project is far behind in its leasing progress, which is why banks haven't lent the group money to finish it. Only about 300,000 square feet of the 2.2 million square feet have been leased, though Mills is promising the New Jersey Sports and Exposition Authority that 800,000 square feet of leases are pending, says NJSEA chairman Carl Goldberg. (ich verweise in diesem zusammenhang nochmal auf die blumigen worte von kanam im geschäftsbericht vom april 2006 zur vermietungsgrundlage! zu den explodierenden kosten ist im april noch nichts vermerkt)

Mr. Goldberg said Mills and its partners are seeking another equity partner for the project, but it isn't clear how likely they are to find one given that the project will have to hit unprecedented operating-income numbers to be feasible.

"Given higher construction costs, we believe that Mills would need to give away its investment for the project to make sense economically to a potential buyer," said Banc of America Securities analyst Ross Nussbaum in a note in which he called on the company to quit the project. (verschenken? )

Adding to Mills's problems, its auditor, Ernst & Young, said there is "substantial doubt" that Mills and a subsidiary will be able to "continue as going concerns" due to a $1.9 billion term loan obtained in May that matures on Dec. 31.(ist wohl die goldmann sachs linie)

Mills has many assets that would appeal to investors, including its Sawgrass Mills in Sunrise, Fla. Analysts say a sale or recapitalization of Mills would be more likely than a bankruptcy proceeding, though the company is already heavily indebted and any sale would come at a steep discount to the value of Mills's shares even three months ago.

Mills has been exploring a sale of all or part of itself for several months. It requested initial expressions of interest from prospective bidders by June 13 but hasn't commented on the results. People who have seen Mills's presentation say it isn't possible to get a reasonable estimate of the company's value of the company because its books are in disarray.

Adding to the difficulty in valuing Mills is the heavy costs it is incurring in trying to stay afloat, including fees for attorneys and investment bankers and severance pay. Greg Andrews, an analyst with Green Street Advisors, who has long had a "sell" rating on the shares, estimates the company has taken on $725 million in new debt since Sept. 30 while adding few tangible assets.

Mills said in the filing that it expects to file its 2005 annual report next month, and its 2006 quarterly reports will follow shortly after. The company hasn't filed an earnings report since September of last year.( im vergleich zu fannie mae ne kleinigkeit)

"Amazingly, despite all the errors in reporting, the inadequate oversight, and the destruction of $2.7 billion in shareholder wealth from the share-price peak, senior management, the board of directors and [Mills's] auditor remain unchanged," said Mr. Andrews in a research note (in der tat)

muß gestehen das sich der bericht noch übler als der von der washington post anhört. wenn hier offen davon gesprochen wird den anteil an "xanadu" zu verschenken ist das nicht mehr zu toppen.



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