The Mills Corporation Reports Second Quarter Results

Business Wire, August 3, 2004

ARLINGTON, Va. -- The Mills Corporation (NYSE: MLS), a leading developer and operator of innovative retail and entertainment destinations, delivered strong operating results for the quarter ended June 30, 2004. Results were driven by improved operating metrics at the Company's growing portfolio of Mills Landmark Centers, 21st Century Retail and Entertainment Centers and International Retail and Entertainment Center.

Financial Results

--Earnings per diluted common share for the quarter ended June 30, 2004 fell 69.6% to $0.21 as compared to $0.69 for the same period a year ago. The decrease in earnings per diluted common share for the quarter was primarily due to a foreign currency exchange loss of $0.04 per share in the second quarter of 2004 versus a foreign currency exchange gain of $0.36 per diluted share in the same period in 2003.

--Earnings per diluted common share for the six months ended June 30, 2004 decreased 21.5% to $0.84 per diluted share from $1.07 per diluted share for the six months ended June 30, 2003. This decrease was due to a foreign currency exchange loss of $0.12 per diluted share in the first six months of 2004 versus a foreign currency exchange gain of $0.38 per diluted share in the first six months of 2003.

--Funds from operations (FFO) per diluted share for the quarter increased 12.2% to $0.92 from $0.82 in the same period a year ago.

--FFO per diluted share for the six months ended June 30, 2004 increased 10.6% to $1.77 versus $1.60 in the same period a year ago.

FFO growth for the quarter was driven by increases in comparable center net operating income (NOI), acquisitions and recently opened centers. FFO during the quarter included the recognition of $11.4 million of income from minority interest in consolidated joint ventures. This income was primarily related to fee and interest income resulting from the Meadowlands Xanadu development project.

FFO is a standard measure of operating performance for REITs. A reconciliation of net income available to common shareholders to FFO is provided in the supplemental financial data section of this press release. Net income available to common stockholders is the most directly comparable GAAP number to FFO.

Operating Statistics

Operating statistics for our projects were as follows:

--For the six months ended June 30, 2004, stabilized comparable property NOI increased 3.5% versus the prior year period. Stabilized comparable property NOI increased 2.3% for the three months ended June 30, 2004 versus the year earlier period. Excluding the impact of a $1.8 million decrease in termination fees, comparable property NOI would have grown by 4.7% during the second quarter.

--Total reported gross tenant sales for the six months ended June 30, 2004 increased approximately 9.0% to $3.13 billion as compared to $2.87 billion in the first six months of 2003.

--For the six months ended June 30, 2004, comparable same-space sales for in-line tenants increased 5.2% versus the same period last year.

--For the twelve months ended June 30, 2004, gross in-line tenant reported sales per square foot for comparable centers increased 5.7% to $351 versus $332 for the 12 months ended June 30, 2003.

--For the twelve months ended June 30, 2004, gross in-line tenant reported sales per square foot for the entire portfolio increased 4.8% to $348 from $332 in the year earlier period.

--The average initial base rent for in-line store spaces opened during the first six months of 2004 was $30.01 per square foot, which was 10.5% higher than rents for tenants who closed or whose leases expired.

--Stabilized comparable property occupancy was 94.6% on June 30, 2004 versus 94.0% on June 30, 2003. Total portfolio occupancy as of June 30, 2004 was 92.5% versus 93.2% as of June 30, 2003. The decline in total portfolio occupancy is largely attributable to below average occupancy at Del Amo. This center was recently acquired and is currently being repositioned for future growth.

Laurence C. Siegel, Chairman and CEO of The Mills Corporation, said, "Demand for space in our centers continues to be robust due to the sales productivity that tenants experience at our properties. Our leasing team not only increased the occupancy at our comparable centers during the quarter but they also accelerated the pace of leasing at our development properties, raising the preleased percentage for Cincinnati Mills to 89.3% and Vaughan Mills, which opens in November, to 83.7%. We anticipate strong openings for all of the developments in our pipeline."

About The Mills Corporation

The Mills Corporation ("TMC") is a fully integrated, self-managed real estate investment trust (REIT) based in Arlington, VA that owns, develops, leases, manages and markets a portfolio of 27 retail and entertainment destination centers totaling approximately 34 million square feet. TMC conducts all of its business through The Mills Limited Partnership ("Mills LP") and its various subsidiaries. Together TMC and Mills LP are referred to as the "Company" herein. Currently, the Company has eight projects under construction or development around the world. The Company's Internet address is www.themills.com.