Mills Saga Heats Up

Mills' portfolio is split into its newer entertainment-focused retail destinations, traditional regional malls and enclosed outlet-oriented centers.

While Vornado and fellow REITs like Simon Property Group (SPG Quote), General Growth (GGP Quote) and Macerich (MAC Quote) (along with Australian mall-owner Westfield) might be interested in the newer assets in Mills' portfolio, a different buyer could emerge for Mills' older, more outlet-focused properties.

One company that might be interested in the outlet properties is the Lightstone Group, a large private real estate investor with a significant portfolio of outlet centers. Lightstone has indirect tie-ins to the hedge funds that recently bought the 6.4% stake in Mills' stock.

The hedge funds, operated by Stark Investments, purchased the Mills stake for $145.6 million, according to a Securities and Exchange Commission filing last week. The investment firm, which is run by Brian Stark and Michael Roth (unrelated to Steve Roth), said it in its filing that Mills' stock "represents an attractive investment opportunity at this time" and added that Stark might decide in the future to "seek control or otherwise influence the management and policies" of Mills.

While Stark isn't known for its real estate expertise, lurking behind the surface of the fund is Louis Conforti, who was once chief financial officer of Prime Group Realty Trust, a formerly public Chicago-based office owner that was bought out by Lightstone.

Conforti most recently headed the Greenwood Group, a real estate investment management and advisory company that also operated a real estate hedge fund. Earlier this year, Conforti and the Greenwood team joined Stark. Conforti declined to comment for this story.

Conforti, after he left Prime Group, helped advise Lightstone on its $889 million purchase of the REIT. According to a Chicago Tribune article last year that cited anonymous sources, Greenwood also was an investor in Lightstone. (It's not clear if Greenwood was a general investor in Lightstone or if Greenwood was an investor for the Prime Group deal alone.)