Troubled Mall REIT Terminates Its President

By Ryan Chittum
From

Beleaguered mall developer Mills Corp. terminated Mark Ettenger as president and said another senior executive will soon leave the company.

Mr. Ettenger, who had been leading the Chevy Chase, Md., company's search for "strategic alternatives," was a top real-estate executive at Goldman Sachs Group Inc. before joining Mills as president in 2004.

The termination, reported in a Securities and Exchange Commission filing, could indicate that the real-estate investment trust hasn't found a buyer at an acceptable price and may decide to try and keep the REIT operating substantially as is or take it private, said Rich Moore, an analyst with RBC Capital Markets. The filing said Mr. Ettenger remains employed at Mills, but didn't say in what capacity.

He "has probably bought and sold more malls than anybody in the country," Mr. Moore said. "If you're going to liquidate your mall company, what better guy to have than him? [The termination] says they're not going to sell the company."

Mills also said James Napoli, executive vice president for leasing, would be leaving by late October. Mills has had trouble leasing its megaproject Meadowlands Xanadu in New Jersey and has been given a deadline of this week by the New Jersey Sports and Exposition Authority, which controls the Meadowlands, to announce some signed deals. Authority Chairman Carl Goldberg said he expects Mills to announce several leases and said Chief Operating Officer Mark Ordan last week gave him details of four leases that had "been executed."

Greg Andrews, an analyst with Green Street Advisors, said the moves don't preclude a liquidation of the company but losing Mr. Napoli at a time when it's under the gun to lease Meadowlands Xanadu is "a huge issue."

Messrs. Ettenger and Napoli couldn't be reached for comment.

On Friday, Mills shares plunged 30% after the company said Meadowlands Xanadu would cost $2 billion, $800 million more than it had projected. The REIT also detailed problems in eight separate areas of its accounting and said its auditor would raise concerns about its viability as an "ongoing concern" in a report next month.

On Monday, Mills announced a deal to sell stakes in malls in Canada, Scotland and Spain for $500 million in net proceeds. Shares jumped nearly 10%, but fell 7.5% yesterday on a negative analyst report.

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