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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): Commission File Number:
March 11, 1997 1-12994
THE MILLS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1802283
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
1300 Wilson Boulevard
Suite 400
Arlington, Virginia 22209
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(703) 526-5000
(Former name or former address, if changed since last report)
Not applicable
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THE MILLS CORPORATION
Item 5 - Other Events
Attached as Exhibit to this form is the document listed below:
Exhibit Document
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8.1 Opinion of Hogan & Hartson L.L.P. relating to certain tax
matters
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE MILLS CORPORATION
Date: March 11, 1997 By: /s/ Thomas E. Frost
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Thomas E. Frost
Senior Vice President
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EXHIBIT INDEX
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Exhibit Description Page
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8.1 Opinion of Hogan & Hartson L.L.P.
regarding certain tax matters
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March 11, 1997
The Mills Corporation
1300 Wilson Blvd.
Arlington, VA 22209
Ladies and Gentlemen:
We have acted as counsel to The Mills Corporation, a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 filed by the Company with the Securities and Exchange Commission on
October 3, 1996, as amended through the date hereof (the "Registration
Statement," which includes a Prospectus and a Prospectus Supplement
(collectively, the "Prospectus")), relating to the proposed public offering
of up to $250,000,000 in aggregate amount of (i) preferred stock, $.01 par
value ("Preferred Stock"), (ii) common stock, $.01 par value ("Common
Stock"), and (iii) warrants exercisable for Common Stock ("Common Stock
Warrants"). In connection with the filing of the Registration Statement, we
have been asked to provide you with our opinion regarding certain federal tax
matters related to the Company. Unless otherwise defined herein, capitalized
terms used in this letter have the meaning set forth in the Registration
Statement.
Basis for Opinions
The opinions set forth in this letter are based on relevant provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations thereunder (including proposed and temporary Regulations), and
interpretations of the foregoing as expressed in court decisions, the
legislative history, and existing administrative rulings and practices of the
Internal Revenue Service (the "IRS") (including its practices and policies in
issuing private letter rulings, which are not binding on the IRS except with
respect to a taxpayer that receives such a ruling), all as of the date
hereof. These provisions and interpretations are subject to change, which
may or may not be retroactive in effect, that might result in modifications
of our opinions. Our opinion does not foreclose the possibility of a
contrary determination by the IRS or a court of competent jurisdiction, or of
a contrary position by the IRS or the Treasury Department in regulations or
rulings issued in the future.
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In rendering our opinions, we have examined the following documents:
(1) the Registration Statement (including the exhibits thereto); (2) the
Limited Partnership Agreement of The Mills Limited Partnership (the
"Operating Partnership"), dated April 21, 1994 and amended effective July 1,
1995; (3) the Amended and Restated Certificate of Incorporation of the
Company, dated April 19, 1994 (the "Company Articles of Incorporation"); (4)
organizational documents of MillsServices Corp. (the "Services Company"),
Potomac Mills Finance Corp., The Mills GP Inc., Washington Potomac Partners
Corp., and Potomac Gurnee Finance Corp., as in effect on the date hereof; (5)
the stock ownership records for the Services Company, Potomac Mills Finance
Corp., The Mills GP Inc., Washington Potomac Partners Corp., and Potomac
Gurnee Finance Corp.; (6) the Company's Quarterly Reports on Form 10-Q for
the periods ended June 30, 1996 and September 30, 1996; (7) the form of
limited partnership agreement used for the formation of the various limited
partnerships in which the Operating Partnership and/or the Company owns an
interest; (8) the form of limited liability operating agreement for the
various limited liability companies in which the Operating Partnership and/or
the Company owns an interest; (9) selected leases at various of the
properties in which the Operating Partnership owns an interest; and (10) the
management agreements as provided by the Company. The opinions set forth in
this letter also are premised on certain written representations of the
Company and the Operating Partnership contained in a letter to us of even
date herewith (the "Management Representation Letter"). Collectively, the
Company, the Operating Partnership, the Services Company, and the other
entities in which the Company and/or the Operating Partnership own
substantially all of the economic interests are sometimes referred to herein
as the "Company Group Entities."
We have made such legal and factual inquiries, including an examination
of the documents set forth above, as we have deemed necessary or appropriate
for purposes of rendering these opinions. For the purposes of our opinions,
however, we have not made an independent investigation or audit of the facts
set forth in the above referenced documents. We have assumed that the
information presented in such documents or otherwise furnished to us is
accurate and complete in all material respects. We are not, however, aware
of facts contrary to the facts set forth in the above referenced documents.
In our review, we have assumed, with your consent, that all of the
representations and statements set forth in the documents (including, without
limitation, the Management Representation Letter) we reviewed are true and
correct, and all of the obligations imposed by any such documents on the
parties thereto, including obligations imposed under the Company Articles of
Incorporation, have been and will be performed or satisfied in accordance
with their terms. We also have assumed the genuineness of all signatures,
the proper execution of all documents, the authenticity of all documents
submitted to us as originals, the conformity to originals of documents
submitted to us as copies, and the authenticity of the originals from which
any copies were made. Moreover, we have assumed that
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each of the Company Group Entities has been and will continue to be operated
in the manner described in the relevant partnership agreement, articles (or
certificate) of incorporation or other organizational documents and that, as
represented by the Company, there are no agreements or understandings between
the Company or the Operating Partnership, on the one hand, and Herbert S.
Miller and Kan Am US, Inc. and/or their affiliates, on the other, that are
inconsistent with Mr. Miller and Kan Am US, Inc. being considered to be both
the record and beneficial owners of more than 90% of the outstanding voting
stock of the Services Company.
We assume for the purposes of this opinion that the Company and the
Service Company each is a validly organized and duly incorporated
corporation under the laws of the State of Delaware, and that the Operating
Partnership is a duly organized and validly existing limited partnership
under the laws of the State of Delaware.
Opinions
Based upon, subject to, and limited by the assumptions and
qualifications set forth herein, we are of the opinion that (1) the Company
was organized and has operated in conformity with the requirements for
qualification and taxation as a real estate investment trust ("REIT") under
the Code for its taxable years ending December 31, 1994, December 31, 1995,
and December 31, 1996, and the Company's current organization and method of
operation will enable it to continue to meet the requirements for
qualification as a REIT for each of its subsequent taxable years; and (2) the
discussion in the Registration Statement under the heading "Federal Income
Tax Considerations" is correct in all material respects and fairly summarizes
the federal income tax considerations that are likely to be material to a
holder of Common Stock of the Company.
In connection with such opinions, we note that the Company is in the
business of owning and operating super regional "value retail" outlet malls.
These properties are extremely large, complex operations that are different
in many respects both from traditional outlet malls and traditional regional
malls. In connection with the operation of these malls, the Company
regularly undertakes a wide range of marketing and promotional activities
that are intended to promote and benefit the entire mall operation through
increasing consumer spending and thereby increasing the rents that the
Company derives from its tenants. The IRS in a number of private letter
rulings has approved specific advertising and promotional activities
undertaken by a REIT that owns a retail shopping center where such marketing
activities are intended primarily to increase overall spending at the center
(and therefore the REIT's revenues from tenants), rather than to benefit a
specific tenant. Some of these advertising and promotional activities
undertaken by the Company are identical to those approved by the IRS in these
private letter rulings, but in view of the complex and relatively unique
nature of the Company's malls, some of the Company's advertising and
promotional activities are
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different from and more extensive than those addressed specifically by the
IRS to date. The Company has represented that all of its advertising and
promotional activities, whether focused on only the mall itself or on
specific stores at the mall, have as their primary purpose encouraging
increased spending throughout the mall and thereby increasing the Company's
overall revenues through increased rents (which are typically based upon a
percentage of sales). Although the matter is not free from doubt, based upon
the basic premise upon which the IRS has concluded that a REIT owning retail
properties can engage in advertising and promotional activities generally and
the Company's representation as to the primary purpose for such activities,
we are of the opinion that the Company's advertising and promotional
activities will not affect its ability to qualify as a REIT.
We assume no obligation to advise you of any changes in our opinion
subsequent to the delivery of this opinion letter. The Company's
qualification and taxation as a REIT depends upon the Company's ability to
meet on a continuing basis, through actual annual operating and other
results, the various requirements under the Code with regard to, among other
things, the sources of its gross income, the composition of its assets, the
level of its distributions to stockholders, and the diversity of its stock
ownership. We have not undertaken to review the Company's compliance with
these requirements on a continuing basis. Accordingly, no assurance can be
given that the actual results of the operations of the Company, the Operating
Partnership, and the other Company Group Entities, the sources of their
income, the nature of their assets, the level of the Company's distributions
to its stockholders and the diversity of the Company's stock ownership for
any given taxable year will satisfy the requirements under the Code for
qualification and taxation as a REIT.
For a discussion relating the law to the facts and the legal analysis
underlying the opinion set forth in this letter, we incorporate by reference
the discussion of federal income tax issues, which we assisted in preparing,
in the section of the Prospectus under the heading "Federal Income Tax
Considerations." We note that the Prospectus does not necessarily address
all of the federal income tax considerations that may be relevant to a holder
of Securities depending upon the particular form and economic terms of the
Securities when issued. It is our understanding that in the event the
Company issues Securities other than Common Stock, the Company will prepare
an additional supplement to the Prospectus, which supplement, together with
the Prospectus, will address the federal income tax considerations that are
likely to be material to a holder of such Securities.
This opinion letter has been prepared solely for your benefit in
connection with the Registration Statement. This opinion may not be used or
relied upon by any other person or for any other purpose and may not be
disclosed, quoted, filed with any governmental agency or otherwise referred
to without our prior written consent. Notwithstanding the foregoing, we
hereby consent to the
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incorporation by reference of this opinion in the
Registration Statement and to the use of the name of our firm therein.
This opinion letter supersedes and replaces our opinion letter dated
October 27, 1996, which letter previously was filed as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
