$900m retail sale will help beleaguered Mills pay debt.

The Mills Corporation announced on Monday the sale of three of its shopping center assets for $981 million, the first sizable pruning of the embattled REIT's portfolio since it became embroiled in controversy for poor financial performance, a series of delayed earnings reports, an SEC investigation, layoffs and a series of scrapped development projects.

The Mills will receive $500 million in net proceeds from the disposition of Vaughn Mills in Ontario, Canada, St. Enoch Center in Glasgow, Scotland, and Madrid Xanadu in Madrid, Spain, properties that the transaction valued at $1.5 billion. Mills owned the former two in a 50/50 joint venture with Canadian shopping center developer and manager Ivanhoe Cambridge and wholly owned Madrid Xanadu, an entertainment and shopping center that is the predecessor of the firm's planned Meadowlands Xanadu project.

Cost estimates for Meadowlands Xanadu, a marquee project in the company's development pipeline, have swelled from $1.2 billion to $2 billion, an increase that has caused some analysts to predict that Mills will have to scrap the complex.

"We continue to believe that the project does not make economic sense at a $2 billion price tag and that Mills will ultimately need to write-off its equity investment," a Bank of America research report stated on Monday.

Revelations also surfaced last week that the company had overstated its earnings between 2003 and 2005 by $210 million.

Proceeds from the sale of the three assets will be used to pay a portion of a $2.230 billion bridge loan that Mills borrowed from Goldman Sachs at the end of April to recapitalize its previous $1 billion credit facility and repay term loans and fund certain property level debt. Many analysts have stated that the recapitalization was done to buy the company additional time to pursue a sale and would potentially help the company secure a higher sales price by removing the perception that it was under severe time constraints to arrange a deal.

An imminent sale of the company came under a mild cloud of doubt when, in mid-April, Mills refinanced Sawgrass Mills, an outlet mall it owns in Florida, that produced a higher than expected valuation of the asset and prompted BofA Securities to revise its estimate of the company's NAV and raise its price target for Mills stock to $32 per share. Conjecture emerged that if the company could execute similar such successful refinancings, it could potentially dig itself out of its financial woes.

But then in June, the company issued a clear statement outlining its intention to pursue a sale.

In the Monday BofA Securities report, analysts Ross Nussbaum and Christy McElroy stated that they had underestimated the property-level NAV for the three properties, whose sale price, if used as a valuation of the properties, would have served to raise their estimate of The Mills' stock by roughly $1 per share.

Mills, whose shares reached a 52-week low of $26.30 on April 7, experienced a 30% sell-off in its stock on Friday. Its share price on Monday was $15.91.