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PHILADELPHIA-Arlington, VA-based Mills Corp. has paid $69.4 million, or $46.26 per sf, for the 1.5-million-sf Forest Fair Mall in Cincinnati, owned by North Miami Beach, FL-based Gator Investments. Forest Fair was developed in 1990.

Mills, which has 13 combination shopping, dining and entertainment properties, plans “a complete makeover,” according to a statement by Laurence C. Siegel, Mills’ chairman and chief executive officer.

The renovation will encompass what Siegel calls “signature Mills treatments,” which include a “festive neighborhood” ambiance and TV, sound and security systems. Forest Fair will be renamed Cincinnati Mills.

The mall will remain in operation during the renovation, which is expected to reach completion in late 2003 or early 2004.

Current tenants include retailers located in other Mills’ malls. Among them are an Off Fifth Saks Fifth Avenue Outlet, Bass Pro Shops Outdoor World, Kohl’s, Burlington Coat Factory, and Babies ‘R’ Us.

Forest Fair is Mills’ first acquisition and renovation. In the statement, Siegel says the company “is pursuing acquisitions of other centers that, like Forest Fair, will provide very attractive yields…we will apply our proven approach to existing centers in key markets.”

As part of the Forest Fair transaction, Mills assumes an in-place construction loan, led by US Bank with participation by LaSalle Bank, of approximately $71.8 million of which $57.6 million was outstanding at the time of the purchase. The construction loan is due on Dec. 1, 2006 and has a variable interest rate of LIBOR plus 2%.

The approximately $11.8-million equity portion of the purchase price was funded from Mills’ revolving credit facility.

In conjunction with this closing, Mills entered into an agreement to exchange 27 of its 46 net lease properties as part of a 1031 exchange transaction for approximately $59 million, net of costs. The net lease properties were acquired in 2000 and are subject to single-tenant net leases operating as CVS stores.

The exchange transaction is expected to close during fourth-quarter 2002. The 27 properties are subject to mortgages that totaled approximately $56 million on June 30.

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