NEW YORK CITY-Vornado Realty Trust officials confirmed that they are interested in a possible deal with troubled retail-REIT the Mills Corp. during the Citigroup 2006 REIT CEO conference in Palm Beach, FL. “There are some people that seem to be looking at it, and we are in dialogue with the Mills,” says Steven Roth, the Paramus, NJ-based Vornado’s chairman and chief executive officer.

Before any deal would be made certain things need to be worked out, Roth says, like Mills financial filings, which are being restated from 2000 through last year’s first three quarters. Adds Michael Fascitelli, Vornado’s president and trustee, “If the right value is there, it’s interesting.”

A deal for Mills, which Fascitelli estimated to be worth about $9 billion, would not be unusual for Vornado. The company was part of a team of investors last year that acquired the Toys “R” Us chain for $6.6 billion. Last year Vornado also purchased a $500-million stock-stake in McDonald’s and invested $337 million in Sears, Roebuck & Co. in 2004. Vornado, Indianapolis-based Simon Property Group, General Growth Properties of Chicago and other companies have all been rumored as possible Mills buyers.

Mill’s troubles were made public, for the most part, last year when 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. Those plunges were due, in part, to a variety of charges taken on in regard to projects in the company’s pipeline and failure to collect some rents. The company, which owns 42 retail properties in the US and Europe, has since laid off 77 employees in a move forecast to save it $1.2 million in this year’s first quarter. Mills executives have also said they are suspending some projects in their development pipeline, but are still planning on developing the 4.7-million-sf Meadowlands Xanadu, a retail-entertainment destination in Bergen County, NJ.

As far as Vornado’s pipeline goes, Roth and Fascitelli shed some light on their proposed redevelopment of the Madison Square Garden stadium here in Midtown, which owners Cablevision are planning for relocation in the Farley Post Office/Moynihan Station project across Eighth Avenue. The current Madison Square Garden site could eventually become a mixed-use retail-office project that could cost about $5 billion to build, Roth says. However, construction on that project could take three to four years to start.

Vornado owns 56 million sf of commercial space, including 111 retail properties in seven states and Puerto Rico. It most recently acquired the 552,500-sf Boston Design Center for $96 million.

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