<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
<TABLE>
<S> <C>
Date of Report (Date of earliest event reported): Commission File Number:
- ------------------------------------------------ -----------------------
March 31, 1998 1-12994
</TABLE>
THE MILLS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
Delaware 52-1802283
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1300 Wilson Boulevard, Suite 400, Arlington, Virginia 22209
-----------------------------------------------------------
(Address of principal executive offices - zip code)
(703)526-5000
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(former name or former address, if changed since last report)
Not Applicable
- --------------------------------------------------------------------------------
<PAGE> 2
THE MILLS CORPORATION
FORM 8-K
INDEX
ITEM 5. OTHER EVENTS
The Registrant made available additional operational information
concerning the Registrant, The Mills Corporation, and the properties
owned or managed by it as of March 31, 1998, in the form of a
Supplemental Information Package, a copy of which is included as an
exhibit to this filing. The Supplemental Information package is
available upon request as specified therein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
NONE.
Exhibits:
<TABLE>
<CAPTION>
Page Number in
Exhibit No. Description Filing
- ----------- ----------- ------
<S> <C> <C>
99.1 Supplemental Information as 4
of March 31, 1998
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: August 26, 1998
THE MILLS CORPORATION
By: /s/ KENNETH R. PARENT
---------------------
Kenneth R. Parent
Executive Vice President,
Chief Financial Officer, and
Treasurer (Principal Financial
and Accounting Officer)
<PAGE> 1
THE MILLS CORPORATION
SUPPLEMENTAL INFORMATION
TABLE OF CONTENTS
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
INFORMATION PAGE
----------- ----
<S> <C>
Overview 5-6
Summary of Properties 7-8
Supplemental Financial Data 9
Property Operating Income 10-11
Occupancy Analysis 12
Lease Expiration Schedule 13-14
Rental Rate Analysis 15
Summary of Outstanding Consolidated Indebtedness 16
Summary of Outstanding Unconsolidated Indebtedness 17
Mills Gross Sales 18
Capital Expenditures 19-21
</TABLE>
<PAGE> 2
THE MILLS CORPORATION
OVERVIEW
THE COMPANY
The Mills Corporation (the "Company") is a fully integrated, self-managed real
estate investment trust ("REIT") .
The Company, which conducts all of its business through The Mills Limited
Partnership ("the Operating Partnership"), in which it owns, as of March 31,
1998, a 1% interest as the sole general partner and a 58.3% interest as a
limited partner. The Company, through the Operating Partnership, is engaged
primarily in the ownership, development, redevelopment, leasing, acquisition,
expansion, and management of super-regional, value and entertainment-oriented
outlet malls (the "Mills") and community shopping centers (the "Community
Centers"). As of March 31, 1998, the Operating Partnership owns or holds an
interest in the following operating properties:
<TABLE>
<CAPTION
<S> <C>
Mills Location
----- --------
Franklin Mills Philadelphia, PA
Gurnee Mills Gurnee, IL (Chicago)
Potomac Mills Woodbridge, VA (Washington, DC)
Sawgrass Mills Sunrise, FL (Ft. Lauderdale)
Ontario Mills Ontario, CA (Los Angeles)
Grapevine Mills Grapevine, TX (Dallas/Fort Worth)
Arizona Mills Tempe, AZ (Phoenix)
Community Centers Location
----------------- --------
Butterfield Plaza Downers Grove, IL
Coopers Plaza Voorhees, NJ
Crosswinds Center St. Petersburg, FL
Fashion Place Columbia, SC
Germantown Commons Shopping Center Germantown, MD
Gwinnett Marketfair Duluth, GA
Liberty Plaza Philadelphia, PA
Montgomery Village Off-Price Center Gaithersburg, MD
Mount Prospect Plaza Mount Prospect, IL
West Falls Church Outlet Center Falls Church, VA
Western Hills Plaza Cincinnati, OH
</TABLE>
In addition to the operating properties, the Company is actively involved in the
development of a number of new Mills, including The Block at Orange (Orange,
California), Katy Mills (Houston, TX), Meadowlands Mills (Carlstadt, NJ),
Concord Mills (Charlotte, NC), Vaughan Mills (Toronto, Cananda), Opry Mills
(Nashville, TN) and Sawgrass Phase III Expansion (Sunrise, FL).
PURPOSE OF FILING
The purpose of this supplemental information package is to provide supplemental
information regarding the operations, assets and liabilities as of March 31,
1998 for the Company and Operating Partnership.
5
<PAGE> 3
THE MILLS CORPORATION
OVERVIEW
CAUTIONARY STATEMENT
Certain matters discussed in this form 8-K and the information incorporated by
reference herein contain "forward-looking statements" for purposes of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
relating to, without limitation, future economic performance, plans and
objectives of management for future operation and projections of revenue and
other financial items, demographic projections and federal income tax
considerations, which can be identified by the use of forward-looking
terminology such as "may", "will", "except", "anticipate", "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. Such forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
described in such forward-looking statements.
6
<PAGE> 4
THE MILLS CORPORATION
SUMMARY OF PROPERTIES
The following table sets forth certain information with respect to the
Properties and the Mills under development as of March 31, 1998:
<TABLE>
<CAPTION>
Approx.
Metropolitan Year Ownership GLA
Name/Location Area Serviced Opened Percentage (Sq. Ft.) (1)
----------------------------- ------------- ------ ---------- ---------------
<S> <C> <C> <C> <C>
MILLS
Potomac Mills................ Washington D.C./ 1985 100% 1,636,870
Woodbridge, VA Baltimore
Franklin Mills............... Philadelphia/ 1989 100% 1,719,557
Philadelphia, PA Wilmington
Sawgrass Mills............... Fort Lauderdale, FL/ 1990 100% 1,878,479
Sunrise, FL Miami/Palm Beach
Gurnee Mills................. Chicago/Milwaukee 1991 100% 1,641,777
Gurnee, IL
Ontario Mills................ Los Angeles 1996 50% 1,326,284 (4)
Ontario, CA
Grapevine Mills.............. Dallas/Fort Worth 1997 37.5% 1,211,091 (5)
Grapevine, TX
Arizona Mills................ Phoenix 1997 36.8% 1,156,964 (7)
Tempe, AZ
----------
MILLS TOTALS/WEIGHTED AVERAGES..... 10,571,022
==========
COMMUNITY CENTERS (11 CENTERS) 2,220,013
==========
</TABLE>
<TABLE>
<CAPTION>
12 Mos. Ended
Annualized No. of 3/31/98
Percent Base Anchor Specialty Store
Name/Location Leased (2) Rent (8) Stores (3) Sales PSF
- ----------------------------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
MILLS
Potomac Mills................ 95% $ 20,509,875 16 $ 319
Woodbridge, VA
Franklin Mills............... 94% 16,440,773 18 295
Philadelphia, PA
Sawgrass Mills............... 98% 24,454,190 20 455
Sunrise, FL
Gurnee Mills................. 96% 16,441,357 16 272
Gurnee, IL
Ontario Mills................ 98% 17,915,583 17 343
Ontario, CA
Grapevine Mills.............. 92% 18,989,170 15 N/A (6)
Grapevine, TX
Arizona Mills................ 94% 17,177,270 14 N/A (6)
Tempe, AZ
------------ ---
MILLS TOTALS/WEIGHTED AVERAGES..... 96% 131,928,218 116 $ 341 (6)
============ ===
COMMUNITY CENTERS (11 CENTERS) 85% 16,849,118 28
============ ===
</TABLE>
(1)Includes 962,163 square feet of GLA owned by certain anchor store tenant as
follows: Potomac Mills-80,000 square feet of GLA; Franklin Mills-208,602
square feet of GLA; Sawgrass Mills-281,774 square feet of GLA; Gurnee
Mills-250,806 square feet of GLA; Liberty Plaza - 13,741 square feet of GLA;
West Falls Church- 2,240 square feet of GLA and Ontario Mills - 125,000
square feet of GLA.
(2)Percent Leased is defined as all space leased and for which rent is being
paid as of March 31, 1998, excluding tenants with leases having a term of
less than 1 year plus GLA owned by anchor store tenants.
(3)Anchor stores include all stores occupying more than 20,000 square feet and
tenant owned anchors described in footnote (1).
(4)Ontario Mills will contain approximately 1.7 million square feet of GLA,
including GLA owned by certain anchor store tenants, upon completion.
(5)Grapevine Mills will contain approximately 1.5 million square feet of GLA,
including GLA owned by certain anchor store tenants, upon completion.
(6)12 Mos. Ended 3/31/98 Specialty Store Sales PSF information is not available
for Grapevine Mills and Arizona Mills which commenced business in October
1997 and November 1997, respectively.
(7)Arizona Mills will contain approximately 1.2 million square feet of GLA,
including GLA owned by certain anchor store tenants, upon completion.
(8)Annualized Base Rent is defined as the contractual minimum rent of tenants
comprising GLOA at 3/98 multiplied by 12.
7
<PAGE> 5
THE MILLS CORPORATION
SUMMARY OF PROPERTIES
MILLS UNDER DEVELOPMENT
<TABLE>
<CAPTION>
Actual/
Anticipated Anticipated Approx.
Metropolitan Construction Opening GLA
Name/Location Area Serviced Start Date (1) Date (1) (Sq. Ft.) (1,2)
- ----------------------------- ------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
The Block at Orange Los Angeles/ 1997 1998 820,000
Orange, CA Orange County
Sawgrass Phase III Expansion Fort Lauderdale, FL/ 1997 1999 300,000
Sunrise, FL Miami/Palm Beach
Katy Mills Houston 1998 1999 1,400,000
Houston, TX
Concord Mills Charlotte 1998 1999 1,400,000
Concord, NC
Vaughan Mills Toronto 1999 N/A (4) 1,400,000
Toronto, Canada
Opry Mills Nashville 1998 N/A (4) 1,200,000
Nashville, TN
Meadowlands Mills New York City/ 1999 N/A (4) N/A (4)
Carlstadt, NJ Northern New Jersey
</TABLE>
<TABLE>
<CAPTION>
Estimated Anchor
Aggregate Store
Company Project Tenant
Name/Location Ownership Cost (3) Commitments
- ----------------------------- ----------------- ------------------ --------------
(millions)
<S> <C> <C> <C>
The Block at Orange 50.0% $ 186 8
Orange, CA
Sawgrass Phase III Expansion 50.0% $ 66 3
Sunrise, FL
Katy Mills 75.0% $ 202 10
Houston, TX
Concord Mills 50.0% $ 217 7
Concord, NC
Vaughan Mills N/A (4) $ 220 N/A (5)
Toronto, Canada
Opry Mills N/A (4) $ 220 N/A (5)
Nashville, TN
Meadowlands Mills 58.2% N/A (4) N/A (6)
Carlstadt, NJ
</TABLE>
(1)Anticipated Construction Start Dates and Opening Dates and Approximate GLA
may be subject to adjustment as a result of factors inherent in the
development process, some of which may not be under the direct control of the
Company.
(2)Approximate GLA includes space that may be owned by certain anchor store
tenants.
(3)Estimated Aggregate Project Cost as of March 31, 1998 is based on the
Company's best estimate of the underlying components, prior to recoveries for
tax increment financings, sales of land to anchor tenants, and other
construction-related recoveries. Many of such underlying components may not
be under the direct control of the Company.
(4)The ownership structure, budgets and/or start dates for these properties
have not yet been determined.
(5)The Company's leasing efforts have not yet commenced for these projects.
(6)Leasing activity has not yet commenced for this project, however, the Company
has received letters of interest from 17 anchor store tenants.
8
<PAGE> 6
THE MILLS CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31
1998 1997
---------- ----------
STATEMENT OF OPERATIONS DATA:
<S> <C> <C>
REVENUES:
Minimum rent $24,537 $23,200
Percentage rent 1,166 1,119
Recoveries from tenants 12,064 11,550
Other property revenue 1,490 1,277
Fee income 1,379 2,515
Interest income 1,109 563
---------- ----------
Total revenues 41,745 40,224
EXPENSES:
Recoverable from tenants 10,383 10,399
Other property operating 1,469 1,323
General and administrative 2,406 2,246
Interest expense 11,094 12,049
Depreciation and amortization 9,612 8,486
---------- ----------
Total expenses 34,964 34,503
Other income/(expense) (43) 243
Equity in earnings of unconsolidated joint ventures 1,940 113
---------- ----------
Income before minority interest 8,678 6,077
Minority interest (3,558) (2,568)
---------- ----------
Net income $5,120 $3,509
========== ==========
Net income per share (Basic) $0.22 $0.18
========== ==========
Net income per share (Diluted) $0.22 $0.18
========== ==========
FUNDS FROM OPERATIONS (*):
Income before extraordinary item
and minority interest $8,678 $6,077
Adjustments:
Add: Depreciation and amortization of real estate
assets 8,559 7,705
Add: Real estate depreciation and amortization
of unconsolidated joint ventures 2,334 722
Add: Extraordinary loss on debt extinguishment of
unconsolidated joint ventures - 397
---------- ----------
Funds from operations $19,571 $14,901
========== ==========
</TABLE>
- ---------------------------------------------------------
(*) The Company generally considers Funds From Operations ("FFO") a widely
used and appropriate measure of performance for an equity REIT which
provides a relevant basis for comparison among REITs. FFO as defined by
National Association of Real Estate Investment Trusts (NAREIT) means income
(loss) before minority interest (determined in accordance with Generally
Accepted Accounting Principles (GAAP)), excluding gains (losses) from debt
restructuring and sales of property, plus real estate related depreciation
and amortization and after adjustments for unconsolidated partnerships and
joint ventures. FFO is presented to assist investors in analyzing the
performance of the Company. The Company's method of calculating FFO may be
different from methods used by other REITs and, accordingly, may not be
comparable to such other REITs. FFO (i) does not represent cash flow from
operations as defined by GAAP, (ii) is not indicative of cash available to
fund all cash flow needs and liquidity, including its ability to make
distributions, and (iii) should not be considered as an alternative to net
income (determined in accordance with GAAP) for purposes of evaluating the
Company's operating performance.
9
<PAGE> 7
THE MILLS CORPORATION
PROPERTY OPERATING INCOME
(IN THOUSANDS)
(UNAUDITED)
THE FOLLOWING TABLE SETS FORTH THE PROPERTY OPERATING INCOME FOR EACH OF THE
MILLS, MAINSTREET (I.E. THE COMPANY'S PUSH CART PROGRAM) AND THE COMMUNITY
CENTERS. THE PURPOSE OF THIS TABLE IS TO PROVIDE DETAILS ABOUT CERTAIN LINE
ITEMS WITHIN THE SUPPLEMENTAL FINANCIAL DATA SHOWN ON PAGE 9 AND IS NOT INTENDED
BE A REPRESENTATION OF NET INCOME ACCORDING TO GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.
FOR THE THREE MONTHS ENDED MARCH 31, 1998
WHOLLY OWNED PROPERTIES
<TABLE>
<CAPTION>
Potomac Franklin Sawgrass Gurnee
------- -------- -------- ------
<S> <C> <C> <C> <C>
RENTAL REVENUES:
Minimum rent $5,199 $4,147 $6,402 $4,173
Percentage rent 107 144 621 171
Recoveries from tenants 2,216 2,781 3,480 2,269
Other revenue 146 218 700 296
--------------------------------------------------------------------
Total rental revenues 7,668 7,290 11,203 6,909
PROPERTY OPERATING COSTS:
Recoverable from tenants 1,838 2,170 3,053 2,031
Other operating 216 244 140 348
--------------------------------------------------------------------
Total property operating costs 2,054 2,414 3,193 2,379
--------------------------------------------------------------------
PROPERTY OPERATING INCOME 5,614 4,876 8,010 4,530
====================================================================
<CAPTION> Community
Mainstreet Centers Total
---------- ------- -----
<S> <C> <C> <C>
RENTAL REVENUES:
Minimum rent $332 $4,284 $24,537
Percentage rent 45 78 1,166
Recoveries from tenants 11 1,307 12,064
Other revenue 104 26 1,490
---------------------------------------------
Total rental revenues 492 5,695 39,257
PROPERTY OPERATING COSTS:
Recoverable from tenants 0 1,291 10,383
Other operating 356 165 1,469
---------------------------------------------
Total property operating costs 356 1,456 11,852
---------------------------------------------
PROPERTY OPERATING INCOME 136 4,239 27,405
=============================================
</TABLE>
UNCONSOLIDATED JOINT VENTURES
<TABLE>
<CAPTION>
Ontario Grapevine Arizona
<S> <C> <C> <C>
RENTAL REVENUES:
Minimum rent $4,686 $4,860 $4,433
Percentage rent 224 180 106
Recoveries from tenants 2,106 1,887 1,616
Other revenue 394 443 284
---------------------------------------------------
Total rental revenues 7,410 7,370 6,439
PROPERTY OPERATING COSTS:
Recoverable from tenants 2,054 1,881 1,560
Other operating 406 341 401
---------------------------------------------------
Total property operating costs 2,460 2,222 1,961
---------------------------------------------------
PROPERTY OPERATING INCOME 4,950 5,148 4,478
===================================================
Mills Share (1) 2,009 1,692 1,645
===================================================
</TABLE>
(1) Based on Mills share of distributable cash flow for the three months ended
March 31, 1998, excluding Management Fees.
10
<PAGE> 8
THE MILLS CORPORATION
PROPERTY OPERATING INCOME
(IN THOUSANDS)
(UNAUDITED)
THE FOLLOWING TABLE SETS FORTH THE PROPERTY OPERATING INCOME FOR EACH OF THE
MILLS, MAINSTREET (I.E. THE COMPANY'S PUSH CART PROGRAM) AND THE COMMUNITY
CENTERS. THE PURPOSE OF THIS TABLE IS TO PROVIDE DETAILS ABOUT CERTAIN LINE
ITEMS WITHIN THE SUPPLEMENTAL FINANCIAL DATA SHOWN ON PAGE 9 AND IS NOT INTENDED
BE A REPRESENTATION OF NET INCOME ACCORDING TO GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.
FOR THE THREE MONTHS ENDED MARCH 31, 1997
WHOLLY OWNED PROPERTIES
<TABLE>
<CAPTION>
Potomac Franklin Sawgrass
------- -------- --------
<S> <C> <C> <C>
RENTAL REVENUES:
Minimum rent $5,151 $3,853 $5,917
Percentage rent 116 122 621
Recoveries from tenants 2,002 2,749 3,294
Other revenue 170 244 508
---------------------------------------------------
Total rental revenues 7,439 6,968 10,340
PROPERTY OPERATING COSTS:
Recoverable from tenants 1,722 2,314 3,020
Other operating 203 92 131
---------------------------------------------------
Total property operating costs 1,925 2,406 3,151
---------------------------------------------------
PROPERTY OPERATING INCOME $5,514 $4,562 $7,189
===================================================
<CAPTION> Community
Gurnee Mainstreet Centers Total
------ ---------- ------- -----
<S> <C> <C> <C> <C>
RENTAL REVENUES:
Minimum rent $3,734 $291 $4,254 $23,200
Percentage rent 70 21 169 1,119
Recoveries from tenants 2,223 11 1,271 11,550
Other revenue 256 82 17 1,277
--------------------------------------------------------------
Total rental revenues 6,283 405 5,711 37,146
PROPERTY OPERATING COSTS:
Recoverable from tenants 2,020 0 1,323 10,399
Other operating 345 387 165 1,323
--------------------------------------------------------------
Total property operating costs 2,365 387 1,488 11,722
--------------------------------------------------------------
PROPERTY OPERATING INCOME $3,918 $18 $4,223 25,424
==============================================================
</TABLE>
UNCONSOLIDATED JOINT VENTURES
<TABLE>
<CAPTION>
Ontario
-------
<S> <C>
RENTAL REVENUES:
Minimum rent $3,991
Percentage rent 126
Recoveries from tenants 1,694
Other revenue 387
-----------------
Total rental revenues 6,198
PROPERTY OPERATING COSTS:
Recoverable from tenants 1,771
Other operating 242
-----------------
Total property operating costs 2,013
-----------------
PROPERTY OPERATING INCOME 4,185
=================
Mills Share (1) 1,728
=================
</TABLE>
(1) Based on Mills share of distributable cash flow for the three months
ended March 31, 1998, excluding Management Fees.
11
<PAGE> 9
THE MILLS CORPORATION
OCCUPANCY ANALYSIS
<TABLE>
<CAPTION>
GROSS LEASED & OCCUPIED AREA (S.F.) (1)
GLA Occupied (3)
Project Total GLA at 3/98 %
- ------- --------- ------- -
<S> <C> <C> <C>
Potomac Mills 1,636,870 1,548,471 94.60%
Franklin Mills 1,719,557 1,619,660 94.19%
Sawgrass Mills 1,878,479 1,846,517 98.30%
Gurnee Mills 1,641,777 1,584,154 96.49%
-------------------------------------------------------
Total Mills 6,876,683 6,598,802 95.96%
Butterfield 114,610 96,240 83.97%
Coopers Crossing 173,509 173,509 100.00%
Crosswinds 144,119 101,584 70.49%
Fashion Place 147,950 125,208 84.63%
Germantown 177,097 162,333 91.66%
Gwinnett 194,719 181,979 93.46%
Liberty Plaza 314,698 153,629 48.82%
Montgomery Village 117,391 103,309 88.00%
Mt. Prospect 298,600 288,763 96.71%
West Falls Church 87,824 85,433 97.28%
Western Hills 449,496 412,131 91.69%
-------------------------------------------------------
2,220,013 1,884,118 84.87%
-------------------------------------------------------
Total Wholly Owned 9,096,696 8,482,920 93.25%
=======================================================
Joint Ventures:
Ontario Mills 1,326,284 1,299,824 98.00%
Grapevine Mills 1,211,091 1,115,464 92.10%
Arizona Mills 1,156,964 1,092,326 94.41%
-------------------------------------------------------
Total Joint Ventures 3,694,339 3,507,614 94.95%
=======================================================
Total Wholly Owned
and Joint Venture 12,791,035 11,990,534 93.74%
=======================================================
<CAPTION>
GROSS LEASED & OCCUPIED AREA, NET OF ANCHORS (S.F) (2)
Total Small GLA Occupied (3)
Project Shop GLA at 3/98 %
- ------- -------- ------- -
<S> <C> <C> <C>
Potomac Mills 627,860 599,059 95.41%
Franklin Mills 597,091 497,194 83.27%
Sawgrass Mills 676,574 664,612 98.23%
Gurnee Mills 633,302 575,679 90.90%
--------------------------------------------------------
Total Mills 2,534,827 2,336,544 92.18%
Butterfield 72,677 54,307 74.72%
Coopers Crossing 14,953 14,953 100.00%
Crosswinds 23,298 17,535 75.26%
Fashion Place 74,692 51,950 69.55%
Germantown 130,341 115,577 88.67%
Gwinnett 97,172 84,432 86.89%
Liberty Plaza 38,210 8,953 23.43%
Montgomery Village 80,986 66,904 82.61%
Mt. Prospect 126,005 116,168 92.19%
West Falls Church 47,743 45,352 94.99%
Western Hills 134,980 127,220 94.25%
--------------------------------------------------------
841,057 703,351 83.63%
--------------------------------------------------------
Total Wholly Owned 3,375,884 3,039,895 90.05%
========================================================
Joint Ventures:
Ontario Mills 521,814 495,354 94.93%
Grapevine Mills 544,217 448,590 82.43%
Arizona Mills 518,578 453,940 87.54%
--------------------------------------------------------
Total Joint Ventures 1,584,609 1,397,884 88.22%
========================================================
Total Wholly Owned
and Joint Venture 4,960,493 4,437,779 89.46%
========================================================
<CAPTION>
TOTAL VACANT S.F.
Vacancies
Project Anchor Small Shop Total
- ------- ------ ---------- -----
<S> <C> <C> <C>
Potomac Mills 59,598 28,801 88,399
Franklin Mills 0 99,897 99,897
Sawgrass Mills 20,000 11,962 31,962
Gurnee Mills 0 57,623 57,623
-------------------------------------------------------
Total Mills 79,598 198,283 277,881
Butterfield 0 18,370 18,370
Coopers Crossing 0 0 0
Crosswinds 36,772 5,763 42,535
Fashion Place 0 22,742 22,742
Germantown 0 14,764 14,764
Gwinnett 0 12,740 12,740
Liberty Plaza 131,812 29,257 161,069
Montgomery Village 0 14,082 14,082
Mt. Prospect 0 9,837 9,837
West Falls Church 0 2,391 2,391
Western Hills 29,605 7,760 37,365
-------------------------------------------------------
198,189 137,706 335,895
-------------------------------------------------------
Total Wholly Owned 277,787 335,989 613,776
=======================================================
Joint Ventures:
Ontario Mills 0 26,460 26,460
Grapevine Mills 0 95,627 95,627
Arizona Mills 0 64,638 64,638
-------------------------------------------------------
Total Joint Ventures 0 186,725 186,725
=======================================================
Total Wholly Owned
and Joint Venture 277,787 522,714 800,501
=======================================================
</TABLE>
(1) Includes 962,163 square feet of GLA owned by certain anchor tenants as
follows: Potomac Mills-80,000 square feet of GLA; Franklin Mills-208,602
square feet of GLA; Sawgrass Mills-281,774 square feet of GLA; Gurnee
Mills-250,806 square feet of GLA; Liberty Plaza- 13,741 square feet of GLA;
West Falls Church- 2,240 square feet of GLA, and Ontario Mills-125,000
square feet of GLA. A ground lease at Franklin Mills of 152,370 square feet
is also included.
(2) Anchor stores include all stores occupying more than 20,000 square feet.
(3) GLA occupied is defined as all space leased (including GLA owned by certain
anchor store tenants) and for which rent is being paid as of March 1, 1998,
excluding tenants with leases that have a term of less than 1 year.
12
<PAGE> 10
THE MILLS CORPORATION
LEASE EXPIRATION SCHEDULE
The following table shows lease expirations assuming that none of the tenants
exercise renewal options. Except as described in footnote (1), the minimum rent
is the monthly contractual minimum rent of the expiring leases as of March 31,
1998 multiplied by 12.
<TABLE>
<CAPTION>
No. of 1998 (1) No. of 1999
Leases Annualized Leases Annualized
Expiring Sq Ft Min. Rent psf Expiring Sq Ft Min. Rent psf
-------- ----- --------- --- -------- ----- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Potomac Mills:
Anchors (2) - - $ - $ - - - $ - $ -
Majors (2) 1 37,960 341,640 9.00 1 42,212 316,590 7.50
Specialty 29 72,038 2,022,926 28.08 20 68,932 1,421,285 20.62
Food Court 2 1,567 85,208 54.38 - - - -
---------------------------------------- -------------------------------------------
32 111,565 2,449,774 $21.96 21 111,144 $1,737,875 $15.64
Franklin Mills:
Anchors (2) - - $ - $ - 1 100,200 $ 547,725 $ 5.47
Majors (2) 1 25,127 162,069 6.45 1 40,232 370,134 9.20
Specialty 16 57,883 1,111,685 19.21 29 88,519 2,047,838 23.13
Food Court - - - - 8 6,229 366,619 58.86
---------------------------------------- -------------------------------------------
17 83,010 1,273,754 $15.34 39 235,180 $3,332,316 $14.17
Sawgrass Mills:
Anchors (2) - - $ - $ - - - $ - $ -
Majors (2) - - - - 1 28,152 422,280 15.00
Specialty 12 28,921 656,977 22.72 7 10,958 392,154 35.79
Food Court - - - - 2 1,206 80,500 66.75
---------------------------------------- -------------------------------------------
12 28,921 $ 656,977 $22.72 10 40,316 $ 894,934 $22.20
Gurnee Mills:
Anchors (2) - - $ - $ - - - $ - $ -
Majors (2) 1 40,752 262,850 6.45 - - - -
Specialty 24 101,528 1,586,186 15.62 16 57,782 1,105,363 19.13
Food Court - - - - - - - -
---------------------------------------- -------------------------------------------
25 142,280 1,849,036 $13.00 16 57,782 $1,105,363 $19.13
Total w/o Joint Ventures:
Anchors (2) - - $ - $ - 1 100,200 $ 547,725 $ 5.47
Majors (2) 3 103,839 766,559 7.38 3 110,596 1,109,004 10.03
Specialty 81 260,370 5,377,774 20.65 72 226,191 4,966,640 21.96
Food Court 2 1,567 85,208 54.38 10 7,435 447,119 60.14
---------------------------------------- -------------------------------------------
86 365,776 $6,229,541 $17.03 86 444,422 $7,070,488 $15.91
======================================== ===========================================
<CAPTION>
No. of 2000 No. of After 2000
Leases Annualized Leases Annualized
Expiring Sq Ft Min. Rent psf Expiring Sq Ft Min. Rent psf
-------- ----- --------- --- -------- ----- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Potomac Mills:
Anchors (2) - - $ - $ - 5 530,633 $ 2,958,997 $ 5.58
Majors (2) 1 41,321 309,908 7.50 7 217,286 1,918,768 8.83
Specialty 32 84,390 2,128,538 25.22 101 363,514 8,456,116 23.26
Food Court 3 2,331 154,992 66.49 9 6,287 394,907 62.81
------------------------------------------------- ------------------------------------------------
36 128,042 $ 2,593,438 $20.25 122 1,117,720 $13,728,788 $12.28
Franklin Mills:
Anchors (2) 1 60,115 $ 390,747 $ 6.50 3 268,619 $ 1,784,302 $ 6.64
Majors (2) 1 32,637 297,256 9.11 7 234,564 2,254,568 9.61
Specialty 26 93,912 2,035,650 21.68 70 245,915 4,900,204 19.93
Food Court - - - - 7 4,736 171,976 36.31
------------------------------------------------- ------------------------------------------------
28 186,664 $ 2,723,653 $14.59 87 753,834 $ 9,111,050 $12.09
Sawgrass Mills:
Anchors (2) 1 78,619 $ 255,512 $ 3.25 7 553,861 $ 3,765,905 $ 6.80
Majors (2) 2 67,851 752,366 11.09 6 171,648 2,036,199 11.86
Specialty 67 217,790 5,165,345 23.72 111 380,206 9,637,582 25.35
Food Court 21 17,595 989,719 56.25 7 7,936 299,651 37.76
------------------------------------------------- ------------------------------------------------
91 381,855 $ 7,162,942 $18.76 131 1,113,651 $15,739,337 $14.13
Gurnee Mills:
Anchors (2) - - $ - $ - 6 522,784 $ 2,792,255 $ 5.34
Majors (2) - - - - 6 194,133 2,036,777 10.49
Specialty 20 57,304 1,090,903 19.04 95 340,242 6,560,244 19.28
Food Court 1 657 22,995 35.00 26 18,166 983,784 54.16
------------------------------------------------- ------------------------------------------------
21 57,961 $ 1,113,898 $19.22 133 1,075,325 $12,373,060 $11.51
Total w/o Joint Ventures:
Anchors (2) 2 138,734 $ 646,259 $ 4.66 21 1,875,897 $11,301,459 $ 6.02
Majors (2) 4 141,809 1,359,530 9.59 26 817,631 8,246,312 10.09
Specialty 145 453,396 10,420,436 22.98 377 1,329,877 29,554,146 22.22
Food Court 25 20,583 1,167,706 56.73 49 37,125 1,850,318 49.84
------------------------------------------------- ------------------------------------------------
176 754,522 $13,593,931 $18.02 473 4,060,530 $50,952,235 $12.55
================================================= ================================================
<CAPTION>
No. of Total
Leases Annualized
Expiring Sq Ft Min. Rent psf
-------- ----- --------- ---
<S> <C> <C> <C> <C>
Potomac Mills:
Anchors (2) 5 530,633 $ 2,958,997 $ 5.58
Majors (2) 10 338,779 2,886,906 8.52
Specialty 182 588,874 14,028,865 23.82
Food Court 14 10,185 635,107 62.36
--------------------------------------------------------
211 1,468,471 $20,509,875 $13.97
Franklin Mills:
Anchors (2) 5 428,934 $ 2,722,774 $ 6.35
Majors (2) 10 332,560 3,084,027 9.27
Specialty 141 486,229 10,095,377 20.76
Food Court 15 10,965 538,595 49.12
--------------------------------------------------------
171 1,258,688 $16,440,773 $13.06
Sawgrass Mills:
Anchors (2) 8 632,480 $ 4,021,417 $ 6.36
Majors (2) 9 267,651 3,210,845 12.00
Specialty 197 637,875 15,852,058 24.85
Food Court 30 26,737 1,369,870 51.23
--------------------------------------------------------
244 1,564,743 $24,454,190 $15.63
Gurnee Mills:
Anchors (2) 6 522,784 $ 2,792,255 $ 5.34
Majors (2) 7 234,885 2,299,627 9.79
Specialty 155 556,856 10,342,696 18.57
Food Court 27 18,823 1,006,779 53.49
--------------------------------------------------------
195 1,333,348 $16,441,357 $12.33
Total w/o Joint
Ventures:
Anchors (2) 24 2,114,831 $12,495,443 $ 5.91
Majors (2) 36 1,173,875 11,481,405 9.78
Specialty 675 2,269,834 50,318,996 22.17
Food Court 86 66,710 3,550,351 53.22
--------------------------------------------------------
821 5,625,250 $77,846,195 $13.84
========================================================
</TABLE>
(1) The 1998 amounts represent the total square footage and total annualized
minimum rent that will expire during the last nine months of 1998.
(2) Anchor tenants are defined as any tenant whose GLA equals or exceeds 50,000
sq. ft. and Major tenants are defined as any tenant whose GLA equals or
exceeds 20,000 sq. ft. but is less than 50,000 sq. ft..
13
<PAGE> 11
THE MILLS CORPORATION
LEASE EXPIRATION SCHEDULE
The following table shows lease expirations assuming that none of the tenants
exercise renewal options. Except as described in footnote (1), the minimum rent
is the monthly contractual minimum rent of the expiring leases as of March 31,
1998 multiplied by 12.
<TABLE>
<CAPTION>
No. of 1998 (1) No. of
Leases Annualized Leases
Expiring Sq Ft Min. Rent psf Expiring Sq Ft
-------- ----- ---------- --- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Ontario Mills:
Anchors (2) - - $ - $ - - -
Majors (2) - - - - - -
Specialty 1 2,739 96,000 35.05 4 7,675
Food Court - - - - - -
------------------------------------------------------------------------
1 2,739 $ 96,000 $ 35.05 4 7,675
Arizona Mills:
Anchors (2) - - $ - $ - - -
Majors (2) - - - - - -
Specialty 2 7,137 132,120 18.51 - -
Food Court - - - - - 0
------------------------------------------------------------------------
2 7,137 $ 132,120 $ 18.51 0 0
Grapevine Mills:
Anchors (2) - - $ - $ - - -
Majors (2) - - - - - -
Specialty 2 2,836 81,058 28.58 2 7,979
Food Court - - - - - -
------------------------------------------------------------------------
2 2,836 $ 81,058 $ 28.58 2 7,979
Total with Joint Ventures:
Anchors (2) - - $ - $ - 1 100,200
Majors (2) 3 103,839 766,559 7.38 3 110,596
Specialty 86 273,082 5,686,952 20.83 78 241,845
Food Court 2 1,567 85,208 54.38 10 7,435
------------------------------------------------------------------------
91 378,488 $6,538,719 $ 17.28 92 460,076
========================================================================
Community Centers:
Anchors (2) 1 56,949 $ 194,300 $ 3.41 - -
Majors (2) - - - - - -
Specialty 20 47,091 614,154 13.04 30 87,262
Food Court - - - - - -
------------------------------------------------------------------------
21 104,040 $ 808,454 $ 7.77 30 87,262
========================================================================
</TABLE>
<TABLE>
<CAPTION>
1999 No. of 2000
Annualized Leases Annualized
Min. Rent psf Expiring Sq Ft Min. Rent psf
---------- --- -------- ----- ---------- ---
<S> <C> <C> <C> <C> <C> <C>
Ontario Mills:
Anchors (2) $ - $ - - - $ - $ -
Majors (2) - - - - - -
Specialty 208,140 27.12 6 13,267 328,742 24.78
Food Court - - - - - -
------------------------------------------------------------------------
$ 208,140 $27.12 6 13,267 $ 328,742 $ 24.78
Arizona Mills:
Anchors (2) $ - $ - - - $ - $ -
Majors (2) - - - - - -
Specialty - - 9 26,582 724,578 27.26
Food Court - - - - - -
------------------------------------------------------------------------
$ - $ - 9 26,582 $ 724,578 $ 27.26
Grapevine Mills:
Anchors (2) $ - $ - - - $ - $ -
Majors (2) - - - - - -
Specialty 202,672 25.40 9 17,454 477,055 27.33
Food Court - - - - - -
------------------------------------------------------------------------
$ 202,672 $25.40 9 17,454 $ 477,055 $ 27.33
Total with Joint Ventures:
Anchors (2) $ 547,725 $ 5.47 2 138,734 $ 646,259 $ 4.66
Majors (2) 1,109,004 10.03 4 141,809 1,359,530 9.59
Specialty 5,377,452 22.24 169 510,699 11,950,811 23.40
Food Court 447,119 60.14 25 20,583 1,167,706 56.73
------------------------------------------------------------------------
$7,481,300 $16.26 200 811,825 $15,124,306 $ 18.63
========================================================================
Community Centers:
Anchors (2) $ - $ - - - $ - $ -
Majors (2) - - 1 21,007 273,091 13.00
Specialty 1,260,073 14.44 25 105,323 1,133,953 10.77
Food Court - - - - - -
------------------------------------------------------------------------
$1,260,073 $14.44 26 126,330 $ 1,407,044 $ 11.14
========================================================================
</TABLE>
<TABLE>
<CAPTION>
No. of After 2000 No. of Total
Leases Annualized Leases Annualized
Expiring Sq Ft Min. Rent psf Expiring Sq Ft Min. Rent psf
-------- ----- ---------- --- -------- ----- ---------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ontario Mills:
Anchors (2) 4 286,023 $ 1,883,132 $ 6.58 4 286,023 $ 1,883,132 $ 6.58
Majors (2) 12 393,447 4,640,544 11.79 12 393,447 4,640,544 11.79
Specialty 132 460,345 10,205,870 22.17 143 484,026 10,838,752 22.39
Food Court 2 11,328 553,155 48.83 2 11,328 553,155 48.83
------------------------------------------------------------------------------------------------------
150 1,151,143 $ 17,282,701 $15.01 161 1,174,824 $ 17,915,583 $15.25
Arizona Mills:
Anchors (2) 5 383,061 $ 3,151,298 $ 8.23 5 383,061 $ 3,151,298 $ 8.23
Majors (2) 9 255,325 3,523,596 13.80 9 255,325 3,523,596 13.80
Specialty 119 408,167 8,813,176 21.59 130 441,886 9,669,874 21.88
Food Court 1 12,054 832,502 69.06 1 12,054 832,502 69.06
------------------------------------------------------------------------------------------------------
134 1,058,607 $ 16,320,572 $15.42 145 1,092,326 $ 17,177,270 $15.73
Grapevine Mills:
Anchors (2) 3 316,309 $ 3,637,000 $11.50 3 316,309 $ 3,637,000 $11.50
Majors (2) 12 350,565 4,783,660 13.65 12 350,565 4,783,660 13.65
Specialty 122 420,321 9,807,725 23.33 135 448,590 10,568,510 23.56
Food Court - 0 - - - 0 - -
------------------------------------------------------------------------------------------------------
137 1,087,195 $ 18,228,385 $16.77 150 1,115,464 $ 18,989,170 $17.02
Total with Joint Ventures:
Anchors (2) 33 2,861,290 $ 19,972,889 $ 6.98 36 3,100,224 $ 21,166,873 $ 6.83
Majors (2) 59 1,816,968 21,194,112 11.66 69 2,173,212 24,429,205 11.24
Specialty 750 2,618,710 58,380,917 22.29 1,083 3,644,336 81,396,132 22.33
Food Court 52 60,507 3,235,975 53.48 89 90,092 4,936,008 54.79
------------------------------------------------------------------------------------------------------
894 7,357,475 $102,783,893 $13.97 1,277 9,007,864 $131,928,218 $14.65
======================================================================================================
Community Centers:
Anchors (2) 5 395,679 $ 2,284,022 $ 5.77 6 452,628 $ 2,478,322 $ 5.48
Majors (2) 19 668,515 4,871,048 7.29 20 689,522 5,144,139 7.46
Specialty 117 463,675 6,218,477 13.41 192 703,351 9,226,657 13.12
Food Court - - - - - - - -
------------------------------------------------------------------------------------------------------
141 1,527,869 $ 13,373,547 $ 8.75 218 1,845,501 $ 16,849,118 $ 9.13
======================================================================================================
</TABLE>
(1) The 1998 amounts represent the total square footage and total annualized
minimum rent that will expire during the last nine months of 1998.
(2) Anchor tenants are defined as any tenant whose GLA equals or exceeds
50,000 sq. ft. and Major tenants are defined as any tenant whose GLA equals
or exceeds 20,000 sq. ft. but is less than 50,000 sq. ft..
14
<PAGE> 12
THE MILLS CORPORATION
RENTAL RATES
The following table sets forth the average base rent per leased square foot of
store openings and closings for each property for the three months ended March
31, 1998.
<TABLE>
<CAPTION>
Anchor Stores
----------------------------------------------------------------------------------------------
Store Openings Store Closings Releasing
During Year During Year Spread (1)
--------------------------- --------------------------- --------------------------
Average Average
Base Rent Total Base Rent Total
Per Sq. Ft. Sq. Ft. Per Sq. Ft. Sq. Ft.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Potomac Mills $ - - $ 10.00 32,530 N/A N/A
Franklin Mills - - - - - -
Gurnee Mills - - - - - -
Sawgrass Mills - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
Total Mills $ - - $ 10.00 32,530 N/A N/A
=========== =========== =========== =========== =========== ===========
Ontario Mills $ - - $ - - $ - -
Grapevine Mills - - - - - -
Arizona Mills - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
Total Joint Ventures $ - - $ - - $ - -
=========== =========== =========== =========== =========== ===========
Community Centers $ - - $ - - $ - -
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Specialty Stores
----------------------------------------------------------------------------------------------
Store Openings Store Closings Releasing
During Year During Year Spread (1)
------------------------- -------------------------- ------------------------------
Average Average
Base Rent Total Base Rent Total
Per Sq. Ft. Sq. Ft. Per Sq. Ft. Sq. Ft.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Potomac Mills $ 21.19 17,985 $ 27.77 8,282 $ (6.58) -23.70%
Franklin Mills 22.46 17,676 15.64 32,551 6.82 43.59%
Gurnee Mills 32.00 1,203 18.21 8,078 13.79 75.76%
Sawgrass Mills 51.82 1,981 30.54 7,249 21.28 69.68%
----------- ----------- ----------- ----------- ------------------------------
Total Mills $ 23.66 38,845 $ 19.72 56,160 $ 3.94 19.99%
=========== =========== =========== =========== ============= ============
Ontario Mills $ 29.42 5,489 $ 26.54 3,884 $ 2.88 10.86%
Grapevine Mills - - 23.57 16,797 N/A N/A
Arizona Mills - - - - - -
----------- ----------- ----------- ----------- ------------- ------------
Total Joint Ventures $ 29.42 5,489 $ 24.13 20,681 $ 5.29 21.94%
=========== =========== =========== =========== ============= ============
Community Centers $ 19.32 4,174 $ 18.53 9,591 $ 0.79 4.24%
=========== =========== =========== =========== ============= ============
</TABLE>
(1) The releasing spread is calculated as the difference between per square
foot openings and per square foot closings for the three months ended March
31, 1998. Openings and closings include renewals but exclude exercised
options. The Releasing Spreads above are based on activity for the 3
months ended March 31, 1998. Due to this limited time period, the
indicated spreads may not be representative of annualized releasing
spreads.
15
<PAGE> 13
THE MILLS CORPORATION
SUMMARY OF OUTSTANDING CONSOLIDATED INDEBTEDNESS
(DOLLARS IN THOUSANDS)
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Principal Annual Earliest day Recourse to
Balance Annual Interest Maturity Interest at which debt Company or
Mortgage/Loan (000's) Term Rate Date (000's) can be repaid Op. Ptnrshp
- ------------- ------- ---- ---- ---- -------- ------------- -----------
Potomac Mills/Gurnee
Mills:
<S> <C> <C> <C> <C> <C> <C> <C>
Tranche A $208,364 Fixed 6.905% 12/17/26 (1) $14,388 (2) 0%
Tranche B 27,000 Fixed 7.021% 12/17/26 (1) 1,896 (2) 0%
Tranche C 15,000 Fixed 7.235% 12/17/26 (1) 1,085 (2) 0%
Tranche D 30,000 Fixed 7.701% 12/17/26 (1) 2,310 (2) 0%
Franklin Mills and
Liberty Plaza 129,211 Fixed 7.814% 6/1/27 (3) 10,096 (4) 0%
Sawgrass Mills:
Tranche A 115,000 Fixed 6.450% 1/18/01 7,418 (5) 0%
Tranche B 10,000 Variable with cap 85 bp over Libor (6) 1/18/01 654 (5), (7) 0%
Tranche C 20,000 Variable with cap 230 bp over Libor (6) 1/18/01 1,598 (5), (7) 0%
Sawgrass Mills -
Phase II 12,000 Variable 235 bp over Libor 7/31/98 965 (7), (8) 0%
Western Hills 14,949 Fixed 7.675% 1/1/99 1,147 (9) 0%
Nine Community
Centers 68,829 Fixed 7.160% 1/31/01 4,928 (10) 0%
Corporate Misc 1,021 Fixed 8.250% 10/31/00 84 (12) 0%
Corporate Misc 2,400 Fixed 6.150% 7/15/98 148 (12) 0%
Corporate Line of
Credit 60,000 Variable 300 bp over Libor 10/31/98 5,213 (8), (11) 100%
Sawgrass Residual 4,700 Variable 165 bp over Libor 1/18/01 345 (13) 0%
---------- ---------
Total $718,474 $52,275
========== =========
</TABLE>
(1) This indebtedness is a 30 year amortizing loan with an anticipated balloon
repayment on December 18, 2003. In the event the mortgage loan is not
repaid by the anticipated balloon repayment date, the annual interest rate
for each tranche will be increased by 2% per annum in excess of the stated
interest rate. In addition, excess cash flow available after payment of the
increased interest rate and scheduled amortization will be used to reduce
the principal balance of the loan. Principal repayments are based on the
scheduled amortization, assuming a 7% mortgage interest rate, over a 30
year period, with the monthly amortization payments being applied
sequentially, beginning with Tranche A to reduce the principal balance.
(2) Optional payments of principal are not permitted prior to December 17,
1999. After such date, prepayments, in whole or in part, are permitted upon
at least 15 days notice. In addition, the Company is required to pay a
prepayment penalty equal to the greater of (i) 1% of the remaining
principal balance or (ii) a yield preservation payment. Generally, yield
preservation payments are intended to compensate the lender for the total
amount of interest it would have earned on the indebtedness but for the
repayment, less the amount of interest that the lender could earn if it
invested the repayment amount in United States Treasury obligations or
other similar securities from the date of the repayment through the
maturity date of the indebtedness.
(3) This indebtedness is a 30 year amortizing loan with an anticipated balloon
repayment on May 5, 2007. In the event the mortgage loan is not repaid by
the anticipated balloon repayment date, the annual interest rate will be
increased by 5% per annum in excess of the stated interest rate. In
addition, excess cash flow available after payment of the increased
interest rate and scheduled amortization will be used to reduce the
principal balance of the loan. The loan balance can be increased to
$165,000 through August 5, 1998, subject to certain financial requirements
relating to increases over $130,000.
(4) This indebtedness may be prepaid, without a prepayment penalty, beginning
180 days prior to May 5, 2007. Prior to that date, there is no right to
prepay the indebtedness, except that $12.5 million of the principal
balance, which has been allocated to the Liberty Plaza shopping center, may
be defeased through the establishment of defeasance collateral (which may
include government or agency securities that have the full faith and credit
of the United States government).
(5) Optional payments of principal on Tranche A of this indebtedness are not
permitted prior to June 20, 2000 other than in connection with certain
casualty or condemnation events occurring with respect to Sawgrass Mills.
On and after such date, Tranche A may be prepaid in full, but not in part,
without any prepayment penalty. Optional prepayments of Tranches B and C of
the indebtedness may be made, in whole or in part, at any time without any
prepayment penalty, but only if payments of interest are current with
respect to each outstanding Tranche and an event of default is not then
continuing.
(6) The loan agreement provides for a cap on LIBOR at 14% for the life of the
loan.
(7) Calculated using 30-day LIBOR at 5.6875%, which was the rate at March 31,
1998.
(8) Prepayable, in whole or in part, at any time without prepayment penalty.
(9) This indebtedness may be prepaid, in whole or in part, upon 30 days notice
to the lender and the payment of a prepayment penalty. The penalty
percentage due on prepayment at any time during the first six months after
December 1, 1996 is 3% of the outstanding principal amount. Thereafter, the
penalty decreases by 0.5% per six month period to a minimum of 1.5%. During
the last three months of its term, the indebtedness may be prepaid without
penalty.
(10) Prepayable, in whole or in part, at any time, upon 60 days prior notice to
the lender. Only in the case of a partial prepayment is the Company
required to pay a prepayment penalty, which would equal to the greater of
(i) 1% of the principal balance, or (ii) a yield preservation payment.
(11) The total commitment under the Line of Credit is $60,000. Funds are
available subject to certain performance measures and restrictive
covenants. In April 1998, this Line of Credit was repaid in its entirety
and a new Line of Credit was obtained with a total commitment of $100,000.
This loan bears interest at a variable rate ranging from 100 bp to 165 bp
over Libor subject to certain debt leverage tests (Libor + 140 bp at
4/1/98). The new line Credit matures April 1, 2000.
(12) Primarily corporate debt with maturities under one year. Prepayable, in
whole or in part, at any time without prepayment penalty.
(13) Prepayable, in whole or in part, at any time, upon 3 days prior notice to
lender without prepayment penalty.
16
<PAGE> 14
THE MILLS CORPORATION
SUMMARY OF OUTSTANDING UNCONSOLIDATED INDEBTEDNESS
(DOLLARS IN THOUSANDS)
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Principal
Balance Total Annual Interest
Mortgage/Loan (000's) Commitment Term Rate
- ------------- ----------- ----------- ---- ---------------
<S> <C> <C> <C> <C> <C>
Arizona Mills $133,070 $145,000 Variable 130 bp over Libor (4),(5)
Grapevine Mills 124,209 155,000 Variable 120 bp over Libor (4),(6)
Ontario Mills 120,000 120,000 Fixed 7.277% (7)
City Block at Orange 1,538 136,000 Variable 165 bp over Libor (4),(8)
Sawgrass Phase III N/A (9) N/A (9) N/A (9) N/A (9)
----------- -----------
Total $378,817 $556,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Annual Earliest day Recourse to
Maturity Interest at which debt Company or
Date (000's) can be repaid Op. Ptnrshp
-------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Arizona Mills 2/1/02 9,298 (1) 18.4% (10)
Grapevine Mills 4/24/01 8,555 (2) 15.0% (11)
Ontario Mills 2/6/02 8,732 (3) 0.0%
City Block at Orange 1/22/02 113 (3) 100.0% (12)
Sawgrass Phase III N/A (9) N/A (9) N/A (9) N/A (9)
----------
Total $26,698
==========
</TABLE>
(1) This indebtedness may be prepaid, in whole or in part, upon 5 business days
notice to the Administrative Agent. provided that (I) any partial
prepayment shall
(2) This indebtedness may be prepaid, in whole or in part, upon 3 business days
notice to the Administrative Agent.
(3) The Company shall have the right to make prepayments of the Loan, without
penalty. or premium (other than the imposition of interest at the Default
Rate
(4) Calculated using 30-day LIBOR at 5.6875%, which was the rate at March 31,
1998.
(5) The Applicable Margin may be reduced to 115 basis points if the Company
receives a "private letter bank loan rating equal to or better than "A-".
(6) Interest on the Note shall accrue at a rate per annum equal to (a) Libor
plus 150 bp, (b) upon the satisfaction of the Completion and Occupancy
Requirements Libor plus 135 bp, (c) upon satisfaction Company of the
Required Debt Service Coverage for three consecutive calendar months Libor
plus 120 bp. As of March 31, 1998, the applicable rate under the terms of
the note was Libor plus 120 bp.
(7) Ontario Mills purchased a SWAP agreement which effectively fixes the
interest rate at a weighted average of 7.277%. The SWAP fixes the interest
rates in the following manner - 7.21% on the first $70 million and 7.37% on
the remaining $50 million. The SWAP agreement matures simultaneously with
the debt on 2/6/02. Upon early termination of the SWAP agreement, Ontario
Mills shall pay or receive commercially reasonable breakage costs.
(8) Interest Rate shall be LIBOR plus (a) 165 basis points until the following
conditions have been satisfied: (i) the Construction Phase Completion Date
has occurred, (ii) the Grand Opening Date has occurred, (iii) 33% of the
Specialty Space has been and continues to be leased to Specialty Tenants
and 55% of the Anchor Space has been and continues to be leased to Anchors,
(iv) the DSC Ratio for any Calculation Period is equal to or greater than
1.00 and (v) no Event of Default is continuing. Once these conditions have
been satisfied the Interest Rate shall be LIBOR plus 150 bp. A further
reduction to Libor plus 135 bp shall occur once the DSC Ratio for any
period is equal to or greater than 1.25. Interest Rate will reduce to LIBOR
plus 125 bp when the DSC Ratio for any period is equal to or greater than
1.40. Interest Rate will reduce to LIBOR plus 115 bp when the DSC Ratio for
any period is equal to or greater than 1.50.
(9) A Construction Loan for Sawgrass Phase III was secured on May 29, 1998.
This is a variable rate loan (Libor plus 165 bp) with a total commitment of
$44,000 and matures on Jan. 18, 2001.
(10) Principal is guaranteed on a several basis by each partner (the Company's
share is 36.8%) reduced as follows: (i) as of closing, the "Guaranteed
Amount" was 100% of Loan Amount; (ii) upon completion of construction,
opening and achieving $16,000 of "In-Place Minimum Rent," the Guaranteed
Amount will reduce to 50%; (iii) upon achieving a 13.5% "Debt Yield,"
("Debt Yield" is defined as EBITDA to total loan commitment) the
Guaranteed Amount will reduce to 25% of the Loan Amount; (iv) upon
achieving a 15% "Debt Yield," the Guaranteed Amount will reduce to 15% of
the Loan Amount; and (v) upon achieving a 17% Debt Yield and an appraised
value indicating a loan to value ratio of no greater than 55%, the
Guaranteed Amount will reduce to $0. As of March 31, 1998, the Company's
share of the Guaranteed Amount was reduced from 36.8% to 18.4% according
to the above formula.
(11) Principal is guaranteed joint and several between the Company and Simon
DeBartolo Group Inc. and is reduced as follows: (i) as of closing, the
"Guaranteed Amount" was 100% of Loan Amount; (ii) upon satisfaction of the
Completion and Occupancy Requirements the Guaranteed Amount will reduce to
50%; (iii) upon achieving a Debt Service Ratio of 1.20:1 for four
consecutive calendar months the Guaranteed Amount will reduce to 25%; (iv)
upon achieving a Debt Service Ratio of 1.35:1 for four consecutive calendar
months the Guaranteed Amount will reduce to 15%. As of March 31, 1998, the
Guaranteed Amount was reduced to 15% according to the above formula. The
Company and Simon DeBartolo Group, Inc. guaranteed this amount jointly and
severally. On August 18, 1998, this loan was repaid in full with proceeds
of a new $155,000 non-recourse permanent loan. This new loan has a ten
year term with a fixed interest rate of 6.47%.
(12) Principal is guaranteed by the Company, reduced as follows: (i) as of
closing, the "Guaranteed Amount" was 100% of Loan Amount; (ii) upon
construction completion, grand opening and a Debt Service Coverage ratio of
1.00 the Guaranteed Amount will reduce to 50%; (ii) upon achieving a DSC
Ratio of 1.25 the Guaranteed Amount will reduce to 25%; (iii) upon
achieving a DSC Ratio of 1.40 the Guaranteed Amount will reduce to 10%; and
(iv) upon achieving a DSC Ratio of 1.50 the Guaranteed Amount will reduce
to 0%.
17
<PAGE> 15
THE MILLS CORPORATION
GROSS SALES
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Twelve Months ended March 31, 1998 Twelve Months ended March 31, 1997
----------------------------------- -------------------------------------
Sq Ft Sales psf Sq Ft Sales psf
----- ----- --- ----- ----- ---
Potomac Mills:
<S> <C> <C> <C> <C> <C> <C>
Anchor/Majors 902,156 $ 185,775,637 $ 206 906,955 $ 182,427,165 $ 201
Specialty 571,757 182,300,631 319 567,268 171,070,711 302
Temporary/Kiosk - 4,327,838 - - 4,122,916 -
------------------------------------ -------------------------------------
1,473,913 $ 372,404,106 $ 253 1,474,223 $ 357,620,792 $ 243
Franklin Mills:
Anchor/Majors 926,469 $ 163,387,229 $ 176 939,055 $ 167,925,469 $ 179
Specialty 490,661 144,628,204 295 475,927 127,265,585 267
Temporary/Kiosk - 6,714,689 - - 6,041,602 -
------------------------------------ -------------------------------------
1,417,130 $ 314,730,122 $ 222 1,414,982 $ 301,232,656 $ 213
Sawgrass Mills:
Anchor/Majors 1,181,031 $ 365,306,764 $ 309 1,179,189 $ 355,759,787 $ 302
Specialty 658,356 299,256,758 455 656,885 272,830,093 415
Temporary/Kiosk - 13,434,274 - - 13,264,639 -
------------------------------------ -------------------------------------
1,839,387 $ 677,997,796 $ 369 1,836,074 $ 641,854,519 $ 350
Gurnee Mills:
Anchor/Majors 726,275 $ 114,546,657 $ 158 651,764 $ 94,520,263 $ 145
Specialty 566,091 153,765,635 272 563,372 142,957,891 254
Temporary/Kiosk - 9,153,925 - - 5,833,985 -
------------------------------------ -------------------------------------
1,292,366 $ 277,466,217 $ 215 1,215,136 $ 243,312,139 $ 200
Ontario Mills:
Anchor/Majors 795,317 $ 137,280,930 $ 173 N/A (3) N/A (3) N/A (3)
Specialty 464,654 159,427,646 343 N/A (3) N/A (3) N/A (3)
Temporary/Kiosk - 6,911,918 - N/A (3) N/A (3) N/A (3)
------------------------------------ -------------------------------------
1,259,971 $ 303,620,494 $ 241 N/A (3) N/A (3) N/A (3)
Total Mills
Anchor/Majors 4,531,248 $ 966,297,217 $ 213 3,676,963 $ 800,632,684 $ 218
Specialty 2,751,519 939,378,874 341 2,263,452 714,124,280 316
Temporary Kiosk - 40,542,644 - - 29,263,142 -
------------------------------------ -------------------------------------
7,282,767 $1,946,218,735 $ 267 5,940,415 $ 1,544,020,106 $ 260
==================================== =====================================
</TABLE>
<TABLE>
<CAPTION>
Twelve Months ended December 31, 1997
----------------------------------------
Sq Ft Sales psf
----- ----- ---
Potomac Mills:
<S> <C> <C> <C>
Anchor/Majors 910,288 $ 184,834,466 $ 203
Specialty 566,004 179,387,582 317
Temporary/Kiosk - 4,490,966 -
----------------------------------------
1,476,292 $ 368,713,014 $ 250
Franklin Mills:
Anchor/Majors 904,677 $ 163,692,900 $ 181
Specialty 487,463 142,341,207 292
Temporary/Kiosk - 6,388,496 -
----------------------------------------
1,392,140 $ 312,422,603 $ 224
Sawgrass Mills:
Anchor/Majors 1,173,109 $ 365,821,871 $ 312
Specialty 655,233 295,180,646 450
Temporary/Kiosk - 13,962,865 -
----------------------------------------
1,828,342 $ 674,965,382 $ 369
Gurnee Mills:
Anchor/Majors 681,640 $ 103,395,397 $ 152
Specialty 561,633 150,055,052 267
Temporary/Kiosk - 8,860,293 -
----------------------------------------
1,243,273 $ 262,310,742 $ 211
Ontario Mills:
Anchor/Majors 768,629 $ 133,724,268 $ 174
Specialty 454,598 159,284,318 350
Temporary/Kiosk - 6,866,186 -
----------------------------------------
1,223,227 $ 299,874,772 $ 245
Total Mills
Anchor/Majors 4,438,343 $ 951,468,902 $ 214
Specialty 2,724,931 926,248,805 340
Temporary Kiosk - 40,568,806 -
----------------------------------------
7,163,274 $ 1,918,286,513 $ 268
========================================
</TABLE>
(1) Grapevine Mills and Arizona Mills are excluded from this analysis since
they did not open until October 1997 and November 1997, respectively and do
not have 12 months of sales data for comparison.
(2) Anchor/Major sales include sales from certain anchor tenants that own their
parcels.
(3) Sales data for Ontario Mills for the Twelve Months ended March 31, 1997 is
not available as Ontario Mills did not open until November 1996.
18
<PAGE> 16
THE MILLS CORPORATION
CAPITAL EXPENDITURES
EXISTING MILLS AND EXISTING COMMUNITY CENTERS COMBINED (9)
<TABLE>
<CAPTION>
Quarter Ending
March 31, 1998 1997 1996
-------------- ----------- ----------
RECURRING NON-TENANT CAPITAL EXPENDITURES (1)
<S> <C> <C> <C>
Costs $ 274,196 $ 435,742 $ 328,974
Per Square Foot (2) 0.02 0.05 0.04
RECURRING TENANT IMPROVEMENTS/LEASING COSTS (3)
Costs $ 304,364 $ 5,143,206 $4,228,743
Per Square Foot Improved (4) 4.80 11.90 12.71
Per Square Foot (2) 0.03 0.62 0.52
TOTAL RECURRING COSTS
Costs $ 578,560 $ 5,579,948 $4,557,717
Per Square Foot (2) 0.05 0.67 0.56
NON RECURRING TENANT IMPROVEMENTS/LEASING COSTS (3)
Costs $ 247,733 (7) $41,571,485 (7) $8,079,220
Per Square Foot Improved (5) 42.05 76.69 44.93
Per Square Foot (2) 0.02 5.03 0.99
WORK IN PROCESS (6)
Cummulative Costs $6,477,242 $ 4,703,992 -
Cummulative Per Square Foot Improved (8) 16.29 14.59 -
</TABLE>
(1) Recurring non-tenant capital expenditures include expenditures that are not
tenant related nor recoverable from tenants.
(2) Includes annual costs divided by total GLA (excluding space owned by
certain anchor store tenants) of the Properties
(3) Tenant Improvements/Leasing costs include tenant specific costs including
tenant improvements, tenant allowances and capitalized internal leasing
costs.
(4) Calculated as Recurring Tenant Improvements/Leasing Costs divided by GLA of
all Recurring Store Openings (including spaces requiring no expenditures).
(5) Calculated as Non-Recurring Tenant Improvements/Leasing Costs divided by
GLA of all Non-Recurring Store Openings.
(6) Work in process that will be shown as Recurring or Non-Recurring when the
work is completed.
(7) Includes expansion costs at Franklin Mills and Gurnee Mills and
non-recurring remerchandising costs. Excludes costs relating to Sawgrass
Phase III expansion.
(8) Calculated as Work In Process divided by GLA of all space with work in
process.
(9) Includes Ontario Mills, Grapevine Mills, and Arizona Mills costs and square
footages for second generation tenants.
19
<PAGE> 17
THE MILLS CORPORATION
CAPITAL EXPENDITURES
EXISTING MILLS (9)
<TABLE>
<CAPTION>
Quarter Ending
March 31, 1998 1997 1996
-------------- ----------- ----------
RECURRING NON-TENANT CAPITAL EXPENDITURES (1)
<S> <C> <C> <C>
Costs $ 164,219 $ 388,003 $ 246,522
Per Square Foot (2) 0.02 0.06 0.04
RECURRING TENANT IMPROVEMENTS/LEASING COSTS (3)
Costs $ 127,580 $ 4,518,073 $3,549,312 (4)
Per Square Foot Improved (4) 2.50 13.35 12.94
Per Square Foot (2) 0.01 0.75 0.60
TOTAL RECURRING COSTS
Costs $ 291,799 $ 4,906,076 $3,795,834
Per Square Foot (2) 0.03 0.81 0.64
NON RECURRING TENANT IMPROVEMENTS/LEASING COSTS (3)
Costs $ 247,732 (7) $41,010,815 (7) $7,746,906
Per Square Foot Improved (5) 42.05 78.37 50.00
Per Square Foot (2) 0.03 6.77 1.30
WORK IN PROCESS (6)
Cummulative Costs $5,531,227 $ 3,989,739 -
Cummulative Per Square Foot Improved (8) 33.38 31.27 -
</TABLE>
(1) Recurring non-tenant capital expenditures include expenditures that are not
tenant related nor recoverable from tenants.
(2) Includes annual costs divided by total GLA (excluding space owned by
certain anchor store tenants) of the Properties
(3) Tenant Improvements/Leasing costs include tenant specific costs including
tenant improvements, tenant allowances and capitalized internal leasing
costs.
(4) Calculated as Recurring Tenant Improvements/Leasing Costs divided by GLA of
all Recurring Store Openings (including spaces requiring no expenditures).
(5) Calculated as Non-Recurring Tenant Improvements/Leasing Costs divided by
GLA of all Non-Recurring Store Openings.
(6) Work in process that will be shown as Recurring or Non-Recurring when the
work is completed.
(7) Includes expansion costs at Franklin Mills and Gurnee Mills and
non-recurring remerchandising costs. Excludes costs relating to Sawgrass
Phase III expansion.
(8) Calculated as Work In Process divided by GLA of all space with work in
process.
(9) Includes Ontario Mills, Grapevine Mills, and Arizona Mills costs and square
footages for second generation tenants.
20
<PAGE> 18
THE MILLS CORPORATION
CAPITAL EXPENDITURES
COMMUNITY CENTERS
<TABLE>
<CAPTION>
Quarter Ending
March 31, 1998 1997 1996
-------------- -------- --------
RECURRING NON-TENANT CAPITAL EXPENDITURES (1)
<S> <C> <C> <C>
Costs $109,977 $ 47,739 $ 82,452
Per Square Foot (2) 0.05 0.02 0.04
RECURRING TENANT IMPROVEMENTS/LEASING COSTS (3)
Costs $176,783 $625,133 $679,431
Per Square Foot Improved (4) 14.21 6.68 15.06
Per Square Foot (1) 0.08 0.28 0.31
TOTAL RECURRING COSTS
Costs $286,760 $672,872 $761,883
Per Square Foot (2) 0.13 0.31 0.35
NON RECURRING TENANT IMPROVEMENTS/LEASING COSTS (3)
Costs $560,670 $332,314
Per Square Foot Improved (5) - 13.73 13.35
Per Square Foot (2) - 0.25 0.15
WORK IN PROCESS (6)
Cummulative Costs $946,015 $714,253 -
Cummulative Per Square Foot Improved (7) 4.08 3.66 -
</TABLE>
(1) Recurring non-tenant capital expenditures include expenditures that are not
tenant related nor recoverable from tenants.
(2) Includes annual costs divided by total GLA (excluding space owned by
certain tenants) of the Community Centers
(3) Tenant Improvements/Leasing costs include tenant specific costs including
tenant improvements, tenant allowances and capitalized internal leasing
costs.
(4) Calculated as Recurring Tenant Improvements/Leasing Costs divided by GLA of
all Recurring Store Openings (including spaces requiring no expenditures).
(5) Calculated as Non-Recurring Tenant Improvements/Leasing Costs divided by
GLA of all Non-Recurring Store Openings.
(6) Work in process that will be shown as Recurring or Non-Recurring when the
work is completed.
(7) Calculated as Work In Process divided by GLA of all space with work in
process.
21
