Mills stock upgrade sours taste for would-be buyers.

Bank of America Securities upgraded its stock rating for shopping mall REIT, Mills Corporation, from sell to neutral last week and raised its price target for the company's shares to $32.

Mills was trading at a 52-week low of $26.30 on April 7 and had climbed to only $28.55 by Friday of last week.

The report may be bad news to potential buyers of Mills as it could likely drive up Mills' share price, which would in turn increase the price at which the company would trade for in the event of a sale. According to written reports, 14 REITs have been sold to private investors in the last year, almost always at hefty premiums to their stock value. One of the most recent and notable examples of this trend was the sale in March of CarrAmerica Realty Corp. to investment firm Blackstone Group for $5.6 billion, an 18% premium over the REIT's stock value.

Mills has stated in a number of releases that it is exploring a sale of the company and has hired Goldman Sachs and JP Morgan Securities as advisors. New York City based REIT Vornado has been rumored to among a shortlist of potential buyers said to be considering an acquisition of Mills.

The BofA Securities report indicated that central to the upgrade in its rating of Mills was a revised estimation of the company's NAV based on a recent recapitalization of an outlet mall it owns in Florida, Sawgrass Mills, which produced a higher than expected valuation of the asset. The REIT has also addressed concerns regarding its credit line by stating it will fund its business by drawing on the net proceeds of property level refinancings: a practice that will better allow the company to sell its portfolio--something it has stated is one of its top priorities.

Mills has been plagued in recent months by accounting restatements, delayed earnings reports, loan defaults, the scrapping of a number of development projects in its pipeline, and an ongoing SEC investigation. Mills' troubles prompted a highly publicized run in January on two German open-end funds operated by real estate company KanAm, a firm with which Mills co-owns a number of properties and development projects, including its $1.2 billion development Meadowlands Xanadu.

In an effort to reduce its operating costs, on April 5 Mills announced that it would be laying off approximately 70 employees, bringing the total headcount reduction it has made in the last three months to 160 people. The firings included the president of the company's development division, James F. Dausch. Dausch will continue to act as a consultant for Mills' largest project, Meadowlands Xanadu, which the company is currently constructing in East Rutherford, New Jersey.