Mills Corp.'s decision to accept a $7.5 billion buyout offer from Toronto-based Brookfield Asset Management Inc., including cash and assumption of debt, came as a March 31 deadline to pay pack a $1.06 billion mortgage loan from lenders represented by Goldman Sachs Mortgage Co.was creeping closer.

The deal values Mills at $21 per share-below what some analysts expected the REIT to fetch. But Brookfield's bid may not be the last word in the saga. Israel-based Gazit-Globe Ltd., which has been heavily courting Mills since October, has reportedly upped its offer to recapitalize Mills for a second time, now to $22 per share.

Gazit-Globe, which owns about 9 percent of Mills stock, originally offered Mills $1.2 billion in October, proposing to buy Mills stock and extend the firm new lines of credit. Then on Tuesday-the day before the Brookfield deal was announced-Gazit upped its offer to $21 per share, amounting to $1.8 billion in acquiring stock and new debt, including an offer to refinance the Goldman Sachs loan. Another shareholder, Farallon Partners, which holds 10.9 percent of all Mills shares - offered to buy $499 million of new Mills stock, offering $20 per share. (In October, Farallon had entered into a standstill agreement with Mills.)

Either of the offers could have helped to solve Mills most pressing problem - a March 31 deadline to pay a $1.06 billion mortgage loan from lenders represented by Goldman Sachs Mortgage Co. Farallon's equity was to have been augmented with CMBS proceeds to pay down the loan, while a Gazit-Global share purchase would have paid down the debt and been coupled with a refinancing of the remaining balance with the Royal Bank of Canada.

"We are disappointed that the Mills Corp. has chosen to accept what we believe is an inferior proposal," Gazit stated in a Wednesday release. "We firmly believe that the best interests of the shareholders have not been served by this decision."

Farallon executives declined to comment on news of Mills' agreement with Brookfield.

In light of Gazit's increased offer, the purchase price could go up to $23 per share but isn't likely to go much higher, according to Rich Moore, lead analyst at RBC Capital Markets. Another buyer could emerge with a higher offer as well.

"It's interesting that Brookfield is the buyer, as opposed to one of the big mall companies," Moore says. "There's a possibility that Simon comes in above these guys."

RBC Capital has maintained a $26 target share price on Mills since August, based on the value of the company's properties in anticipation of an eventual sale. "We expected since August that someone would buy these guys," Moore says. "There's no management team left, no pipeline left, no anything left, so it had to be sold."

As part of the purchase agreement, Brookfield has agreed to assume the Goldman loan and provide Mills with a $500 million revolving line of credit until the acquisition closes.

"We are pleased to be able to work with The Mills Corp. to move beyond the recent issues it has encountered," says Bruce Flatt, managing partner and CEO of Brookfield. "We look forward to working with management of The Mills in getting back to business and focusing on service excellence to attract premium tenants to this high-quality retail portfolio." Brookfield is a global asset manager with more than $50 billion in assets under management.

Goldman's loan was originally set to mature on Dec. 31, but the parties agreed to an extension until the end of the first quarter. The agreement provided for a further extension if Mills met certain conditions, which included filing its 2005 financials with the Securities & Exchange Commission by the end of January, and filing its audited financials for 2006 by March 1.

The likelihood of gaining a further extension seems unlikely, with the March 1 deadline for filing 2006 financials a scant two weeks away. Mills just completed a lengthy internal investigation into its accounting irregularities earlier this month, stating it will cut shareholder equity by as much as $352 million. Disconcertingly, the investigation turned up possible misconduct behind some of the many accounting problems discovered.

Brookfield's offer represents a price of $21 per share for Mills' stock, plus assumed debt and preferred stock. It is expected to be completed in the second quarter of 2007, and will make Mills a subsidiary of Brookfield, an asset manager with $50 billion worth of properties in the United States. (Mills stock had been trading at $17.77 per share before the deal was announced.)

As recently as Jan. 16, analyst Ross Nussbaum at Bank of America estimated the value of Mills' assets at $10 to $12 per share. The same day, Morgan Stanley analysts Matthew Ostrower and Mick Chiang estimated Mills' value at between $4 and $20 per share, with a price target of $13. Mills' failure to publish financial results for 2005 and 2006 make value assessments challenging for analysts as well as shareholders.

"MLS' appropriate valuation is enormously difficult to determine given the lack of recent disclosure and the likely ongoing accounting restatements," Morgan Stanley analysts reported on Jan. 16. "We continue to believe that setting an appropriate price target for the company is a gamble more than anything else."

Brookfield is being generous in its offer to Mills stockholders, Nussbaum suggests in a Jan. 17 report. "Based on our analysis, the implied cap rate on the deal is 6.15 percent, which, in our view, meaningfully overvalues Mills' assets," he says. "Our cap rate had been 6.75 percent."

Under terms of the agreement, Brookfield will purchase all outstanding common stock of Mills and common units of The Mills Limited Partnership, plus approximately $7.5 billion including assumed debt and preferred stock. Mills will merge into a newly formed Brookfield subsidiary. Mills stockholders will have the option to accept a cash payment for their shares or receive instead a stake in the public company that will continue to manage the former Mills assets. The stock alternative will be subject to proration if more than 20% if existing Mills shareholders elect to receive stock.

The transaction is subject to approval by Mills' stockholders. Mills and Brookfield expect to file a proxy statement in connection with the special meeting of stockholders following the filing of Mills' annual report for the year ended Dec. 31, 2006. The merger is expected to close in the second half of 2007.

(An earlier version of this story originally appeared on www.nreionline.com)