The Mills Corporation Business Information, Profile, and History
Our mission is to deliver superior shareholder value by creatively developing, acquiring, merchandising and managing a diversified portfolio of exceptional domestic and international retail and entertainment destinations.
History of The Mills Corporation
The Mills Corporation is a real estate investment trust (REIT) listed on the New York Stock Exchange, focusing on shopping malls, which it develops, owns, and manages. The Arlington, Virginia-based company is best known for its mega-malls, combining retail and entertainment elements, that bear the Mills name, such as Potomac Mills in Washington, D.C.; Sawgrass Mills in Ft. Lauderdale, Florida; Franklin Mills in Philadelphia, Pennsylvania; Discover Mills in Atlanta, Georgia; Opry Mills in Nashville, Tennessee; and Gurnee Mills in Chicago, Illinois. In addition, Mills operates more than 20 regional shopping centers across the United States, as well as international centers located in Toronto, Madrid, and Glasgow. All told, Mills controls more than 50 million square feet of leasable space, and its properties attract some 370 million visits a year, resulting in $8.7 billion in tenant sales.
Predecessor's Founding in the 1960s
Mills grew out of the portfolio of the Western Development Corporation, founded in Washington, D.C., in 1967 by Herbert S. Miller. According to the Washington Post, Miller "shelved the corporation about the time he went to work for Shannon and Luchs. Building a reputation as an idea man not overly concerned with details, Miller brokered what is perhaps the most glamorous ménage a trois in Washington real estate." Miller brought together property owner Mrs. Olga Mazza, a real estate subsidiary of Exxon, and department store Neiman Marcus to develop Mazza Gallerie. In the process he made extensive contacts in the market. Miller left Shannon and Luchs in 1973 to become eastern regional director for Michigan-based Taubman Company, the nation's largest developer at the time. Less than two years later he struck out on his own and put Western Development to use, taking on partners Richard L. Kramer and Gerald L. Dillon. Kramer was a Wharton School of Finance graduate who managed his family's real estate holdings, which included more than 1,000 acres in the Washington area, while Dillon had been a senior vice-president in charge of construction at Taubman. Over the next few years they developed strip malls and office buildings together.
Miller and Western Development forged a national reputation in the real estate industry with the 1985 opening of Potomac Mills in the Washington, D.C., market, which broke the accepted model of a regional shopping mall. Instead of department store anchors, it relied on the combination of off-price retailers and factory outlet stores. Bringing the retailers together required some salesmanship on the part of Miller, however. "The outlet people didn't want to be near off-price, and the off-pricers didn't want to be near factory outlets," Miller told Shopping Centers Today. "We told the outlet people it would be called Dale City Mall and would be out in the country. With off-price people, we called it the Washington Outlet Mall and emphasized that it was near the city." Potomac Mills proved so popular that construction carried on for several years, as the original 650,000 square feet of space grew to 1.6 million square feet. But it was not just the prices that brought in the patrons to Potomac Mills. According to the Washington Times, "It also broke with convention for discount retailing, dressing up Potomac Mills with pricey fixtures such as giant overhead movie screens for shoppers' entertainment and a licensed Elvis Presley museum stocked with the rock 'n' roll king's guns and jewelry." According to WWD, "By inviting several mid-sized anchors--rather than major department store anchors--to ground the project, and surrounding retail with family fun and entertainment, the developer created an unusual retail hybrid. Closer to a virtual department store than a regional mall, it was a place where outlets and big-box power stores could cohabit peacefully with price sensitive retailers."
Western Development continued to open strip malls as well, but the Mills concept received greater emphasis over the next several years. In 1989 Franklin Mills opened in Philadelphia, Pennsylvania, followed a year later by Sawgrass Mills in Ft. Lauderdale, and Gurnee Mills, located between Chicago and Milwaukee, in 1991. But even as the Mills concept was expanding, Western Development was experiencing serious difficulties: overdue taxes, property lien foreclosure threats, and a lawsuit filed against it by the Franklin Mills partner. The suit maintained that Miller and Kramer were "embroiled in extensive and protracted negotiations with a view toward the dissolution and division of their respective interests in Western and Western's various affiliates." To make matters worse, the economy was not doing well, making it a difficult environment for all real estate developers.
Going Public As a REIT in 1994
Miller and Kramer parted ways, with Miller continuing on with the Mills concept. In 1991 Mills Corporation was incorporated in Virginia and in January 1993 it replaced Western Development as the parent of the four Mills malls. A year later Mills was taken public as a REIT, one of many real estate companies to take advantage of the long-neglected investment vehicle.
With real estate available at distressed prices in the early 1990s, REITs had finally became an attractive mainstream investment option and many real estate firms went public, starting in 1993. Many of them staked out their claims in different sectors, such as office buildings, apartments, and--like Mills Corp.--shopping malls.
One of Miller's chief lieutenants, Laurence C. Siegel, was named Mill's chief executive officer, and he would soon succeed Miller as chairman of the board. In August 1995, Miller resigned. According to press accounts, he clashed with board members as well as investors over policy, especially his plan to take the Mills concept overseas, such as building megamalls in Asia. Given that the company had several other domestic projects that had been stalled for the past couple of years, Miller's foreign ambitions seemed out of place.
Siegel had played a key role in creating the Mills value concept, very much the result of his background in retailing. His father was the head of general merchandising for Philadelphia's John Wanamaker department store, where Siegel began to learn the trade while working part-time in high school. He then earned a degree in marketing and finance from Boston University and went to work for Merrill Lynch Commercial Services, rising to vice-president of leasing for the mid-Atlantic states before joining Western Development in 1983 and becoming executive vice-president of leasing. A major contribution Siegel made in the refinement of the Mills concept was the development of new store divisions with major retailers to fill out the store roster at the Mills properties, including OFF 5th Saks Fifth Avenue Outlet, Last Call from Neiman Marcus, Ann Taylor Loft, ESPN X Games Skatepark, and Bass Pro Shops Outdoor World.
Soon after taking the helm at Mills, Siegel succeeded in bringing to completion Ontario Mills, which opened in November 1996 near Los Angeles. The $190 million, 1.5-million-square-foot mall offered a 30-plex cinema and a walk-through simulated nature experience. The mall proved so popular that it was rivaling Disneyland as a tourist destination. Two more Mills malls opened in 1997: Grapevine Mills in Dallas and Arizona Mills near Phoenix.
In November 1998 the company opened a new venture in Orange County, California, pursuing a new concept called "The Block." Essentially, it was an open-air shopping mall with a main street ambiance. It proved popular because of its 30-screen movie theater, bowling alley, restaurants, and microbreweries, but the Block was not a brand that Mills Corp. pursued further, although it continued to develop similar open-air shopping malls. Mills closed out the 1990s with the opening of Katy Mills in Houston and Concord Mills in Charlotte, North Carolina, in 1999. In the second half of the decade, under Siegel's leadership, the company also upgraded its older properties. Potomac Mills and Franklin Mills replaced some tenants with a number of new merchants and added more entertainment options. Sawgrass Mills opened The Oasis, a 300,000-square-foot entertainment zone, while Ontario Mills added 150,000 square feet of additional retail and entertainment space.
Going International in 2001
Mills Corp. opened a pair of Malls in 2000. The 1.2-million-square-foot Opry Mills opened in May on the site of the former Opryland USA theme park, adjacent to the world famous Grand Old Opry House. Then, in November 2000, the 1.3-million-square-foot Arundel Mills opened on a site located between Baltimore and Washington, D.C. The company opened just one mall in 2001, Discover Mills in Atlanta. Also in 2001 Mills Corp.'s first international venture took shape, Madrid Xanadu. It would open two years later and feature a 17-story indoor ski and snowboarding slope.
In 2002, Mills Corp. opened Colorado Mills near Denver and also completed its first acquisition: The Shops at Riverside in Hackensack, New Jersey, which the company hoped would be a companion to an envisioned mall in the Meadowlands, the sports complex home to the Giants and Jets in the National Football League, the Nets of the National Basketball Association, and the Devils of the National Hockey League, as well as a harness track. The site was attractively located across the Hudson River from midtown Manhattan, but because it held such great potential it became the battleground for a number of developers. In fact, Miller had begun work on a potential Meadowlands mall in the mid-1980s, and every year in its annual report Mills Corp. touted the project, seemingly on the verge of getting the green light but always delayed. In the meantime, the company made further acquisitions in 2003. It bought five properties from Toronto's Cadillac Fairview Corporation: the Galleria in White Plains, north of New York City; Broward Mall in Fort Lauderdale; Dover Commons in Dover, Delaware; Northpark Mall in Jackson, Mississippi; and The Esplanade in New Orleans. Later in 2003, the company acquired Del Amo Fashion Center in Los Angeles, Great Mall in San Jose, and Gwinnett Place in Atlanta. Mills Corp. also completed construction on a new property in 2003, the 1.1-million-square-foot St. Louis Mills.
The acquisition spree continued in 2004. The company bought Briarwood Mall in Ann Arbor, Michigan; Columbus City Center and the Mall at Tuttle Crossing, both in Columbus, Ohio; The Falls in Miami, Florida; Hilltop Mall in San Francisco; Lakeforest Mall in Washington, D.C.; Marley Station in Baltimore; Meadowland Mall in Reno, Nevada; Stoneridge Shopping Center in San Francisco; and Westland Mall in Miami. In addition, in 2004, Mills Corp. opened a pair of projects it developed: Cincinnati Mills and Vaughn Mills near Toronto, which was the first enclosed retail center built in Canada in 14 years.
The pace slackened in 2005, although the company still added three more properties to its portfolio through acquisition: Southdale Center in Minneapolis; Southridge Center in Milwaukee; and St. Enoch Centre in Glasgow, Scotland. It also opened Pittsburgh Mills, located 16 miles north of Pittsburgh, Pennsylvania. In addition, the company broke ground on a major project in the heart of Chicago's Loop, where it was building a 4.8-million-square-foot retail, entertainment, office, and hotel complex on N. State Street, a long-vacant block.
But Mills Corp. was not adjusting to its rapid growth without some difficulty. In 2005 it announced that it would restate earnings, a development that concerned the investment community. According to the New York Times, "Several analysts said the latest difficulties have raised serious questions of whether Mills can handle an ambitious and risky development program. 'My concern is that they took on too much too fast, that they didn't have the systems or the people or the infrastructure in place to handle all the growth,' said Ross Nussbaum, a REIT analyst at Banc of America Securities." Despite concerns about the depth of the organization, Mills Corp.'s slate of properties were not in question, as the malls continued to perform well. What was in doubt, however, was the fate of the projects on the drawing board: Mercati Generali in Rome, the first retail and entertainment complex of its kind to make use of a historical site in the city; Potomac Town Center, to be located across from Potomac Mills; and Meadowlands Xanadu, a project 20 years in the making.
108 North State Street II, L.L.C.; Arizona Mills, L.L.C.; Franklin Mills, L.L.C.; Gurnee Mills L.L.C.; Katy Mills, L.L.C.; Ontario Mills, L.L.C; Potomac Mills Operating Company, L.L.C.; Sawgrass Mills Phase II, L.L.C.
Developers Diversified Realty Corporation; General Growth Properties, Inc.; Simon Property Group, Inc.
- Key Dates
- 1967 Herbert S. Miller founds Western Development Corporation.
- 1985 Western opens Potomac Mills in Washington, D.C.
- 1989 Franklin Mills opens in Philadelphia.
- 1994 Four Mills malls are packaged into a real estate investment trust called The Mills Corporation.
- 1995 Laurence Siegel replaces Miller as CEO and chairman.
- 2002 The Shops at Riverside in Hackensack, New Jersey, becomes the first acquisition.
- 2003 Madrid Xanadu opens.
- 2005 St. Enoch Centre is acquired in Glasgow, Scotland.
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