ARLINGTON, VA-The Mills Corp.'s earnings and FFO were both down during its Q3, which ended Sept. 30, due to various one-time charges as well as a decrease in straight-line rents. The REIT's third-quarter NOI fell 5.2%, to $104.7 million, from the same year-ago period, while FFO dropped 53.6%, to $0.45 per share.

Some of the one-time charges are related to the modification of five skate park leases at some of its centers due to an ownership change as well "as an increase in bad debt reserves due to changes in the estimated collectability of certain accounts receivable," says the company's quarterly SEC filing. Meanwhile, straight-line rents fell by $2.4 million compared to last year's third quarter.

Other charges related to write offs due to two projects the company was pursuing that executives decided to abandon, in Tampa, FL, and Florence, Italy. "It was hard to find the appropriate site there," said Laurence C. Siegel, chairman and CEO of the company, of the Tampa project. "It become cost prohibitive." In Florence, Mills could not obtain the desired layout for a center."

Mills' original SEC filing and conference-call date was Nov. 1, and foreseeing the shortfalls, executives moved the events to yesterday. The company's stock hovered just over $43 per share yesterday, falling from near $54 on Oct. 31, when executives announced the filing delay.

"We are troubled by the multiple items that caused the Q3 earnings miss as the number of write-offs and shortfalls were well beyond our expectations," says a Banc of America research report on the company's performance. "We believe that Mills' financial house is not in order and that changes to policy, procedures, and personnel are needed."

Mills and operating partners are spending $1.1 billion in centers under development and redevelopment. Among the largest costs are $179 million for the addition of a lifestyle wing, cinema and food court at Del Amo Fashion Center, in Torrance, CA; and the $114 million relocation of an anchor tenant and in-line store expansion at the Shops at Riverside, in Hackensack, NJ. Executives expect to complete both projects next year.

Next week executives plan to break ground on 108 N. State St., in Chicago. That $295-million development will include 400,000 sf of retail, as well as 200,000 sf to 450,000 sf of office space; a 200- to 300-room hotel; a 200- to 300-unit residential tower. Mills is the owner of 42 regional centers across the country, as well as in Scotland and Spain.