A number of interesting developments emerged in the Mills ( MLS) saga last week. While merger talk continued to swirl around fellow real estate investment trust Vornado ( VNO), a hedge fund with ties to the commercial real estate industry disclosed that it had purchased a 6.4% stake in Mills, citing a compelling valuation. Mills, which owns a large portfolio of retail malls and outlet centers, is currently restating its financials and looking at a possible sale of the company or some of its assets. The REIT's stock has fallen 40% below its 52-week high of $66.44 set last August. Vornado confirmed last week that it has spoken with Mills' management regarding some sort of deal, and said at a conference that it would be interested in Mills at the right price. Vornado, which is headed by well-respected real estate investor Steve Roth, owns several regional malls and lucrative retail real estate in New York City and the tri-state area. The company also owns office properties in major metro markets and was involved in the consortium that purchased Toys R Us for $6.6 billion last year. "Steve Roth and Mills CEO Larry Siegel, I believe, are close," says Dean Frankel, a portfolio manager with Urdang Securities Management, which owns Mills shares. "Larry has mentioned Steve Roth many times in conversations I've had with him ." While Vornado might be interested in certain Mills assets, it may not want to buy the whole company, says Barry Vinocur, editor of Realty Stock Review. Vinocur and other industry experts believe a club deal, in which several parties team up to take different pieces of Mills, is more likely. But Vinocur doesn't believe any deal will happen until Mills has its restated financials to show prospective buyers, and his sources tell him that restated financials won't be ready until April at the earliest.