Mills Saga Heats Up

Lightstone, which first entered the outlet-center arena with its $624 million purchase of Prime Retail in late 2003, has recently been busy raising money for a nonlisted $300 million REIT called Lightstone Value Plus REIT. The new REIT will own office, retail and other commercial properties. Recently, the nonlisted REIT announced its first potential purchase: an outlet store in St. Augustine, Fla., for $28 million.

If Lightstone, a noted value hunter, wanted to beef up its outlet exposure, it could make a run at Mills' older outlets, purchasing them for its new nonlisted REIT. Lightstone did not return a call seeking comment.

"Might Lightstone get involved -- who knows?" Vinocur wrote in an email. "I wouldn't rule anything or anyone out at this point." He says he remains just as confused as to Conforti and Stark's possible motives.

"With the likes of Vornado, Westfield, General Growth, Simon, Macerich, etc., circling, I find it hard to imagine how [Stark] could end up more than a bit player -- unless they have a lot more capital at their disposal than I have been led to believe and they have a strategy for managing the assets -- or a player waiting in the wings to do so," Vinocur says.

Also last week, Fidelity Management & Research Company disclosed in an SEC filing that it had upped its stake in Mills to 5.73 million shares, a 10.2% stake. Fidelity is the second-largest Mills owner behind Cohen & Steers(CNS Quote), but neither is considered to be interested in buying the company.