The struggling Mills Corp. has found an unlikely champion in Chaim Katzman, the outgoing CEO of shopping center REIT Equity One Inc. This morning, Gazit-Globe Ltd., an Israeli real estate investment firm controlled by Katzman, disclosed it had purchased 9 percent of Mills' outstanding stock and has offered to invest an additional $1.2 billion to re-capitalize the company. In an SEC filing, Katzman urged Mills' board of directors to abandon plans to sell the company and let him save the REIT.

Gazit-Globe officials would not discuss what kind of a rebuilding strategy Katzman may have in mind, saying that it is too early in the process to talk about specific measures. Gazit-Globe claims to have a record in turning around under-performing companies, but would not provide any examples of previous successes. Gazit Globe (www.gazit-globe.com) is a public company listed on the Tel Aviv stock exchange. Gazit owns 41 percent of Equity One's outstanding shares and 53 percent of the outstanding shares of Canadian shopping center REIT First Capital Realty Inc.

REIT analysts were less than impressed with Katzman's proposal. "It is unclear at this point why Gazit would re-capitalize Mills rather than buy the company outright," writes Bank of America Securities analyst Ross Nussbaum. "We're not convinced that shareholder value would be maximized over the long term under the leadership of Chaim Katzman, given a mixed track record at Equity One. Katzman also has little to no experience operating or developing regional malls." Equity One's portfolio consists of 203 strip center properties containing 20.9 million square feet of space.

In addition, Nussbaum points out that Katzman is in the habit of making generous offers, on which he fails to follow up. He cites Equity One's 2005 bid for Cedar Shopping Centers, Inc., in which Katzman offered $17 per share for the company, at a 14 percent premium to Cedar's trading price, but never consummated the deal.

"In our view, it's possible that Gazit-Globe may have timed its bid to re-capitalize Mills with a $1.2 billion equity infusion at $24.50 per share to enable Gazit to get in ahead of other potential suitors prior to the filing of Mills' financial statements.
Mills was up $2.50 Wednesday, to $19.52 per share. Overall, Mills is up 59 percent from its 52-week low of $12.27 per share reached in mid-August.

Mills is due to file its financial reports for this for its fiscal year ended September 30 by the end of October or risk disciplinary measures by the New York Stock Exchange. The Exchange granted Mills an extension to produce at least some of its delinquent reports.

-- Elaine Misonzhnik