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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K/A

|/x/ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2000
or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 1-12994

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THE MILLS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE(State or other jurisdiction of
incorporate or organization)

52-1802283(I.R.S. Employer Identification No.)1300 WILSON BOULEVARD, SUITE 400
ARLINGTON, VA(Address of principal executive office)

22209(Zip Code)


Registrant's telephone number, including area code:(703) 526-5000

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Securities
registered pursuant to Section 12(b) of the Act:

Title of each Class

Name of each exchange on which registeredCOMMON STOCK, $0.01 PAR VALUE

NEW YORK STOCK EXCHANGE


Securities
registered pursuant to Section 12(g) of the Act: None

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter periods that the registrant was required to file such report(s)) and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or
any amendment to this Form 10-K/A. / /

As
of August 9, 2001, the aggregate market value of the 23,969,389 shares of common stock held by non-affiliates of the registrant was $592,043,908 based upon the
closing price ($24.70) on the New York Stock Exchange composite tape on such date. (For this computation, the registrant has excluded the market value of all shares of its common stock reported as
beneficially owned by executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the registrant.) As of
August 9, 2001, there were 24,236,009 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's proxy statement for the annual shareholders meeting to be held in 2001 are incorporated by reference into Part III.

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THE MILLS CORPORATION    Annual Report on Form 10-K/A  December 31, 2000    TABLE OF CONTENTS

|PART I     |  | 3                                                                                    
|---------- |  | -------------------------------------------------------------------------------------
|Item 1.    |  | Business                                                                             
|           |  | Risk Factors                                                                         
|Item 2.    |  | Properties                                                                           
|Item 3.    |  | Legal Proceedings                                                                    
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                  
|PART II    |  | 50                                                                                   
|Item 5.    |  | Market for the Registrant's Common Equity and Related Shareholder Matters            
|Item 6.    |  | Selected Financial Data                                                              
|Item 7.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                           
|Item 8.    |  | Financial Statements and Supplementary Data                                          
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III   |  | 65                                                                                   
|Item 10.   |  | Directors and Executive Officers of the Registrant                                   
|Item 11.   |  | Executive Compensation                                                               
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management                       
|Item 13.   |  | Certain Relationships and Related Transactions                                       
|PART IV    |  | 66                                                                                   
|Item 14.   |  | Exhibits, Financial Statements, Schedules and Reports on Form 8-K                    
|SIGNATURES |  | 69                                                                                   

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PART I

Item 1. Business

Cautionary Statement

Certain matters discussed in this Form 10-K/A and the information incorporated by reference herein contain "forward-looking statements" for
purposes of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on
current expectations and are not guarantees of future performance.

Forward-looking
statements, which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "would be," or "continue" or
the negative thereof or other variations thereon or comparable terminology are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those
projected. Among those risks, trends and uncertainties are the general economic climate; the supply and demand for retail properties; interest rate levels; the availability of financing; and other
risks associated with the development, acquisition, and operation of retail properties, including risks that the development of the project may not be completed on schedule, that the Company may not
be able to lease available space to tenants at favorable rental rates, that tenants will not take occupancy or pay rent in accordance with their leases, or that development or operating costs may be
greater than anticipated, as well as those risks described in this Form 10-K/A under the heading "Risk Factors."

The
Company undertakes no duty or obligation to publicly announce any revisions to, or updates of, these forward-looking statements that may result from future events or
circumstances.

The Company

Except as otherwise required by the context, references in this Form 10-K/A to "we," "us," "our" and the "Company" refer to The Mills
Corporation and its direct and indirect subsidiaries, including The Mills Limited Partnership, and references in this Form 10-K/A to the "Operating Partnership" refer to The Mills
Limited Partnership, of which The Mills Corporation is the sole general partner.

We
own interests in, develop, redevelop, lease, acquire, expand and manage a portfolio currently consisting of eleven super-regional, retail and entertainment-oriented centers (the
"Mills"), one community shopping center (the "Community Center"), one urban entertainment/retail project (the "Block"), a portfolio of forty-six single tenant net lease properties ("Net
Lease Properties") and other related commercial development. We are a fully-integrated, self-managed real estate investment trust (a "REIT") with approximately 1,400 employees as of
December 31, 2000 and provide all development, redevelopment, leasing, financing, management and marketing services with respect to all properties currently in operation. The Mills comprise the
primary focus of our operations, with approximately 16.0 million square feet of gross leasable area ("GLA") in nine states, of which approximately 1.0 million square feet is owned by
certain anchor tenants.

We
were originally incorporated in the Commonwealth of Virginia on January 2, 1991 and reincorporated in the State of Delaware in 1994. We became publicly traded on
April 21, 1994. We have authorized 150,000,000 shares of common stock, $0.01 par value per share, comprised of 100,000,000 shares of voting common stock and 50,000,000 shares of nonvoting
common stock and 20,000,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2000, there were 24,048,331 shares of common stock (including 639,507 shares of common stock
issued to the Operating Partnership and held in escrow to secure specific obligations pursuant to a settlement agreement entered into with Chelsea GCA Realty and Simon Property Realty Group, L.P. in
October 1998), and no shares of preferred stock outstanding. We are the sole general partner of the Operating Partnership and currently own 59.68% of the Operating Partnership's outstanding
partnership units (before giving effect to the common stock held in escrow and the corresponding partnership units associated with

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those shares). The Operating Partnership's partnership units (other than those owned by us) are exchangeable under certain circumstances for the cash equivalent of a share of our common stock or, at
our option, a share of our common stock.

As
the sole general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership, subject to certain limited
exceptions. The Operating Partnership either holds title to our properties or directly or indirectly holds 100% of the general and limited partnership interests in the partnerships that own Potomac
Mills, Franklin Mills, Sawgrass Mills (Phases I and II) and Gurnee Mills. The Operating Partnership also owns, directly or indirectly, interests as both a general partner and a limited partner
in the joint ventures that own the following properties: Ontario Mills (50.%), Grapevine Mills (37.5%), Arizona Mills (36.8%), The Block at
Orange (50%), The Oasis at Sawgrass (50%), Concord Mills (37.5%), Katy Mills (62.5%), Opry Mills (66.7%) and Arundel Mills (37.5%). The Operating Partnership has also formed joint ventures to develop
additional properties. We and our joint venture partners are entitled to a 9% preferred return on each of our qualified capital contributions and any remaining cash flow is distributed pro rata in
accordance with each partners' respective ownership interests.

We
conduct all of our business through the Operating Partnership and the Operating Partnership's various subsidiaries, which include: (i) Management Associates Limited
Partnership, which provides leasing and management services for our properties, and (ii) MillsServices Corp. ("MSC"), which provides management services to properties in which we do not own an
interest and provides development services for our properties and new properties acquired by us. The Operating Partnership owns 100% of the interests in the Management Associates Limited Partnership,
and 99% of the non-voting preferred stock (representing a 99% economic interest) and 5% of the voting common stock of MSC. In addition, two of our key employees each own 0.5% of the
non-voting preferred stock (representing, in the aggregate, a 1% economic interest) and 47.5% of the voting common stock of MSC. MSC also owns 100% of Mills
Enterprises, Inc.("MEI"), an entity that owns FoodBrand (the Company's food and beverage entity that was created in 1999 to master lease and operate food courts at the Company's malls with
existing operations at Katy Mills, Opry Mills, Arundel Mills and Franklin Mills, and future projects under development) and which holds investments in other retail ventures.

The 10-K/A is being filed based on the results of a review of the Company's financial statements by the Securities and Exchange Commission whereby the Company has provided additional
disclosures related to the consolidation of MSC.

We
maintain our executive offices at 1300 Wilson Boulevard, Suite 400, Arlington, Virginia 22209. Our telephone number is (703) 526-5000. We also maintain a web
site at www.millscorp.com.

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Our Portfolio

The following table sets forth a summary of our operating properties as of December 31, 2000:

|NAME/
LOCATION                 |  | METROPOLITAN
AREA
SERVICED       |  | YEAR
OPENED/
ACQUIRED |  | APPROX.
GLA
(SQ. FT.) (1) |   | PERCENT
LEASED
(2) |   | NO. OF
ANCHOR
STORES
(3) |  | COMPANY
OWNERSHIP |      
|------------------------------ |  | -------------------------------- |  | --------------------- |  | ------------------------- | - | ------------------ | - | ------------------------ |  | ----------------- | -----
|MILLS                          |  |                                  |  |                       |  |                           |   |                    |   |                          |  |                   |      
|Potomac Mills                  |  | Washington, D.C./Baltimore       |  | 1985                  |  | 1,635,591                 |   | 98                 | % | 19                       |  | 100               | %    
|Franklin Mills                 |  | Philadelphia/Wilmington          |  | 1989                  |  | 1,739,480                 |   | 96                 |   | 19                       |  | 100               | %    
|Sawgrass Mills                 |  | Fort Lauderdale/Miami/Palm Beach |  | 1990                  |  | 1,849,159                 |   | 99                 |   | 20                       |  | 100               | %    
|Gurnee Mills                   |  | Chicago/Milwaukee                |  | 1991                  |  | 1,699,808                 |   | 97                 |   | 16                       |  | 100               | %    
|Ontario Mills                  |  | Los Angeles                      |  | 1996                  |  | 1,471,096                 |   | 98                 |   | 23                       |  | 50                | % (4)
|Grapevine Mills                |  | Dallas/Ft. Worth                 |  | 1997                  |  | 1,547,611                 |   | 97                 |   | 20                       |  | 37.5              | % (5)
|Arizona Mills                  |  | Phoenix                          |  | 1997                  |  | 1,227,564                 |   | 98                 |   | 16                       |  | 36.8              | % (6)
|The Oasis at
Sawgrass          |  | Ft.Lauderdale/ Miami/Palm Beach  |  | 1999                  |  | 290,063                   |   | 90                 |   | 3                        |  | 50.0              | % (7)
|Concord Mills                  |  | Charlotte                        |  | 1999                  |  | 1,260,655                 |   | 94                 |   | 16                       |  | 37.5              | % (5)
|Katy Mills                     |  | Houston                          |  | 1999                  |  | 1,189,726                 |   | 92                 |   | 13                       |  | 62.5              | % (8)
|Opry Mills                     |  | Nashville                        |  | 2000                  |  | 1,111,264                 |   | 97                 |   | 15                       |  | 66.7              | % (9)
|Arundel Mills                  |  | Baltimore, MD/ Washington, DC    |  | 2000                  |  | 1,011,023                 |   | 88                 |   | 11                       |  | 37.5              | % (5)
|                               |  |                                  |  |                       |  |                           |   |                    |   |                          |  |                   |      
|MILLS TOTALS/WEIGHTED AVERAGES |  |                                  |  | 16,033,040            |  | 96                        | % | 191                |   |                          | 
|                               |  |                                  |  |                       |  |                           |   |                    |   |                          |  |                   |      
|BLOCKS                         |  |                                  |  |                       |  |                           |   |                    |   |                          |  |                   |      
|The Block
at Orange            |  | Los Angeles/
Orange County       |  | 1998                  |  | 642,057                   |   | 95                 | % | 10                       |  | 50                | % (7)
|                               |  |                                  |  |                       |  |                           |   |                    |   |                          |  |                   |      
|COMMUNITY CENTER               |  |                                  |  |                       |  |                           |   |                    |   |                          | 
|Liberty Plaza                  |  | Philadelphia                     |  | 1994                  |  | 371,535                   |   | 97                 | % | 4                        |  | 100               | %    
|                               |  |                                  |  |                       |  |                           |   |                    |   |                          |  |                   |      

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A
brief description of the two types of real estate projects in our portfolio is set forth below:

Mills.The Mills are the primary focus of our operations. A typical Mills contains 175 to 200 specialty tenants and 15
to 20 anchor tenants, and averages approximately 1.5 million square feet of gross leasable area. Mills are essentially a hybrid of various retail formats with a diverse tenant base consisting
of department stores, specialty stores, manufacturers outlets, off-price retailers, catalog retailers, "category killers" (which offer a selection of products in one defined merchandise
category), and entertainment venues. A list of representative tenants is set forth below:

|DEPARTMENT STORES            |  | SPECIALTY STORES  |  | MANUFACTURERS OUTLETS
|---------------------------- |  | ----------------- |  | ---------------------
|Off 5th-Saks Fifth Avenue    |  | Bose              |  | Ralph Lauren/Polo    
|Last Call from Neiman Marcus |  | Bath & Body Works |  | Liz Claiborne        
|Nordstrom Rack               |  | Sharper Image     |  | Tommy Hilfiger       

OFF-PRICE RETAILERS

CATALOG RETAILERSOld Navy

J. CrewCasual Male

L.L. BeanFamous Footwear

J.C. Penney Outlet


CATEGORY KILLERS

ENTERTAINMENT VENUESBed, Bath & Beyond

AMC TheatresBorders

Jillian'sBass Pro Shops Outdoor World

Van's Skate Park


Mills
are located in large, metropolitan areas with a minimum of one million people within a 20 mile radius, a projected annual population growth of at least 6%, a minimum median
annual household income of $50,000 and a market with steady tourist appeal. The prototypical physical layout is a "race

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track" format of stores on one level with ample non-decked parking. We believe shoppers of the Mills can generally be characterized as follows:



Other Retail Formats.We are continuing to explore the feasibility of alternative retail formats that will serve the
unique needs of target markets such as major university towns, dense suburban areas and large city centers. With the opening of The Block at Orange in November, 1998, we have created a new retail
format consisting of an open-air urban mainstreet atmosphere combining both entertainment (with themed restaurants, theatres and other interactive uses) with distinctive retail concepts
such as Van's Skate Park, a clothing/shoe store and skateboarding park. In 1999, we further modified this concept with our addition of The Oasis at Sawgrass. We are continuing to explore the optimum
retail concepts to be incorporated into our project at the Meadowlands. We believe that our success with the Mills concept will carry over to these other retail concepts, as evidenced by the current
95% occupancy rate
at The Block at Orange, the current 90% occupancy rate at The Oasis at Sawgrass, and the favorable market reaction to this distinctive development.

Competitive Advantages

All of the Mills are located in areas which have other shopping centers and retail facilities. The amount of rentable retail space in the vicinity of the Mills
could have an effect on the amount of rent we charge and on our ability to rent vacant space and/or renew leases of such Mills. In addition, the Mills compete with numerous shopping alternatives as
retailers themselves face increasing competition from discount shopping centers, outlet malls, discount shopping clubs, direct mail, internet sales and telemarketing. However, we believe that the
Mills have a number of inherent competitive advantages over other retail formats in operation today, and that these advantages are responsible for the strong operating performance of our portfolio of
properties, as more fully described below.

Consumer Draw.We believe that the critical mass achieved by aggregating an average of approximately 190 stores and
1.5 million square feet of gross leasable area under one roof, coupled with the distinctive physical characteristics of our Mills, are the primary reasons that our properties attract so many
people and create extended shopping trips. We believe people are attracted to our distinctive mix of tenants, including department stores, specialty stores, manufacturer's outlets,
off-price retailers, catalog retailers, "category killers" (which offer a selection of products in one defined merchandise category), and entertainment venues. We believe we have created a
shopping environment that is festive and social, with interior designs resembling a "Mainstreet" atmosphere which incorporates staggered store fronts and roof lines, natural lighting and colorful
graphic accents. Shopping avenues in our Mills are interspersed with a variety of food establishments and video and entertainment courts, further enhancing the entertainment nature of the shopping
trip.

We
believe our Mills have a primary trade area of an estimated 40 miles. The Mills that operated throughout 2000 are among the top tourist destinations in their respective states. The
Mills average 18 million visitors each per year, and are visited by an excess of 2,000 tour buses annually.

Brand Awareness.The Mills brand is synonymous with a one of a kind value, entertainment and variety retail offering.
We believe that the Mills is the only retail shopping experience that is differentiated by its product type with the market, consumers and tourist shoppers and their identification with the Mills
brand.

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Attractiveness to Tenants.We believe tenants are attracted to our Mills as a result of the heavy foot traffic
generated at the Mills and the length and productivity of consumer visits, which translate into
high sales levels. In addition, we believe tenant occupancy costs are low as a result of lower common area maintenance costs at a Mills versus many other retail formats. The lower common maintenance
costs are a result of several factors, including:



Flexibility of Product.The single-story, simple construction of our Mills allows us to easily reconfigure them in
response to changing retail formats. Furthermore, our anchor leases give us more flexibility to establish our preferred merchandise mix and to undertake any desired remodeling projects than is
afforded by traditional regional mall anchor leases. This makes it easier for us to make room for new, exciting retailers, which keep the product fresh and enhance consumer draw, and to replace
underperforming stores.

Barriers to Entry.We believe that our status as the innovator of the Mills and Block product types and our success
with our existing portfolio have made us the leading developer of large-scale value/entertainment oriented retail projects. The strong relationships we have developed with our tenants give us a number
of competitive advantages in the development process, including the ability to validate project feasibility in the predevelopment stage with tenant commitments and the ability to fulfill significant
pre-leasing requirements imposed by construction lenders. In addition, the complexity and financial commitment associated with developing a project the size and nature of a Mills precludes
many potential competitors from entering our business. Furthermore, through our contractual alliances with Simon Property and Taubman Realty, we believe we are already aligned with two of the
strongest developers of retail projects in the country. See "Strategic Relationships." Finally, we believe we are the only company currently building Mills-type projects that has fully
integrated development capabilities reflecting lessons learned from successful past development projects.

Development Pipeline

Projects Under Construction.We currently have one Mills under construction, comprising approximately
1.2 million square feet of new gross leasable area. Estimated total development cost for this project is approximately $231 million. The estimated development costs will be funded
through construction
financing proceeds and joint venture partner equity contributions. The following table sets forth certain information with regard to this project.

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MILLS UNDER CONSTRUCTION

|Name/
Location |  | Metropolitan
Area
Served |  | Anticipated
Opening
Date (1) |  | Approximate
Gross
Leasable
Area (sq.ft.) (1) |  | Company
Ownership |  | Estimated
Total
Project
Cost (2)
(In Millions) |     | Required
Equity from
Company
(In Millions) |   | Anchor
Store
Tenant
Commitments
|-------------- |  | ------------------------ |  | ---------------------------- |  | -------------------------------------------- |  | ----------------- |  | ---------------------------------------------- | --- | ------------------------------------------ | - | -------------------------------
|Discover Mills |  | Atlanta                  |  | Fall
2001                    |  | 1,200,000                                    |  | 50.0% (3)         |  | $                                              | 231 |                                            |  |                                

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The
following is a brief description of the Mills project currently under construction:

Discover MillsGwinette County, Georgia.The Discover Mills project will be constructed on a
225-acre site located just off Interstate 85 and Sugarloaf Parkway in Gwinette County, Georgia. The approximately 1.2 million square foot project planned for this site will consist
of a combination of specialty retailers, cinemas, and themed restaurants. We have obtained nine anchor lease commitments from Off 5th-Saks Fifth Avenue, F.Y.E. (For Your Entertainment),
Jillian's, Off Broadway Shoes, Bass Pro Shops Outdoor World, Blacklion, Books-A-Million, Burlington Coat Factory and Home Company. Construction began in June 2000, and
we expect to open this project in the fall of 2001. Development costs through December 31, 2000 were approximately $82.4 million.

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The project is being developed and is owned by a limited partnership between us, with a 50% interest, and Kan Am, with a 50% interest. Kan Am has agreed to fund 100% of the project's
initial required equity. We have no equity contribution requirement. The remaining project costs are expected to be financed through a construction loan which is expected to close at the beginning of
the second quarter of 2001. Kan Am will receive a 9% preferred return on its equity and the remaining cash flow will be distributed pro rata in accordance with the percentage ownership interests. We
have guaranteed Kan Am's receipt of this preferred return until qualified permanent financing is secured for the project. We have the right to provide all development, management and leasing services
for the project, subject to the approval of Kan Am for specified major decisions, including a sale or refinancing of the project and the approval of the development and annual budgets. We have
guaranteed completion of the project within parameters of the approved development budget.

At
specified times following the tenth anniversary of the project's opening, either we or Kan Am can exercise a buy-sell provision. Pursuant to the buy-sell
provision, we can require Kan Am to sell to us, for cash or limited partnership units of the Operating Partnership at Kan Am's election, Kan Am's entire interest in the partnership. Also, pursuant to
the buy-sell provision, Kan Am can require us to acquire, for cash or limited partnership units of the Operating Partnership at our election, Kan Am's entire interest in the partnership.

Projects Under Development.In addition to the project currently under construction, we are also actively pursuing
other prospective projects. These projects are in various levels of the due diligence stage where we are in the process of determining site/demographic viability, negotiating tenant commitments or
working through third-party approval processes. Consistent with past practice, we will not begin construction on these projects until we have completed our investment due diligence process and
obtained significant pre-leasing commitments. While we currently believe that these projects will ultimately be completed, we cannot assure you that they will actually be constructed or
that they will have any particular level of operational success or ultimate value. The following is a brief description of these prospective projects.

Colorado Mills-Denver, Colorado.We have identified a 130 acre site in Lakewood, Colorado, ten miles west of downtown
Denver. On March 22, 2000, Colorado Retail Development, L.L.C. (our affiliate) and the Stevinson Partnership, Ltd., the fee owner of the Colorado Mills site, entered into a Contribution
Agreement that, among other things, provides that upon the satisfactory completion of customary due diligence and feasibility studies, the parties will form a joint venture and the Stevinson
Partnership, Ltd. will contribute the site to the joint venture. It is anticipated that Colorado Retail Development, L.L.C. which will hold a 75% interest in the joint venture, will be fully
obligated to fund all cash equity requirements for the development of the shopping center and will receive a 9% cumulative preferred return on the first $42.7 million of its equity
contributions and a 12% cumulative preferred return on any additional equity contributions. It is further anticipated that an additional joint venture partner would share or fund all of the equity
requirements for the project in exchange for ownership interests and preferred returns on its equity contributions. The Stevinson Partnership, Ltd. which will hold a 25%
interest, will receive capital account credit for the negotiated value of the land contributed, and will receive a 9% cumulative preferred return. Colorado Mills is targeted to open in the fall of
2002.

Missouri Mills-St. Louis, Missouri.We have identified a 200 acre site in Hazelwood, Missouri, sixteen miles from
downtown St. Louis. The Company is in the process of forming a joint venture to develop the site. The 200 acre site is located at the northwest quadrant of State Highway 370 and Missouri Bottom Road
in the city of Hazelwood, approximately sixteen miles from downtown St. Louis. We anticipate construction could commence in 2001 and the project could open in 2002.

Vaughan Mills-Toronto, Ontario.We and Cambridge Shopping Centres II Limited have secured a site for the proposed
development of a Mills project. The 180-acre site is located in the City of

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Vaughan at the southeast corner of Highway 400 and Rutherford Road, approximately 20 miles north of downtown Toronto, Ontario. Upon completion, this project would be the first Mills outside of the
United States. We anticipate that the project will be developed jointly by one of our affiliates and Cambridge Shopping Centres II, Ltd., as tenants in common. Our ownership interest will be
50%. We anticipate that our equity requirement for Vaughan Mills may exceed $30 million, of which we have funded approximately $22.2 million as of December 31, 2000, in addition
to capitalized interest and overhead. We are targeting a 2003 opening.

Meadowlands Mills-Carlstadt, New Jersey.We have acquired a mortgage interest in a 592-acre site located on
the New Jersey turnpike (I-95) adjacent to Meadowlands Sports Complex and approximately five miles from New York City and have signed preliminary agreements with Empire Ltd., the
current owner of the site, concerning the development of Meadowlands Mills. Commencement of construction is contingent upon the completion of ongoing Environmental Impact Statement and the
federal/state permitting process. A Special Area Management Plan (SAMP) for the Meadowlands area was published in the Federal Register on April 22, 1999. On July 20, 2000, the U.S. Army
Corp of Engineers announced that it had completed the Draft Environmental Impact Statement on Mills' Section 404 Fill Permit and the close of public comment occurred in October, 2000. The U.S.
Army Corp of Engineers is currently completing the Final Environmental Impact Statement which precedes the Record of Decision for a wetlands fill permit. The mixed-use development consists
of 2.0 million square feet of gross leaseable area for Meadowlands Mills, plus office and hotel space. The project would be developed on an entitled site on 90.5 acres plus roads and retention
facilities. As of December 31, 2000, we had invested $43.2 million, in addition to capitalized interest and overhead. Of the amount invested, $24.4 million is our equity
contribution and the remaining balance is an advance to the joint venture.

Upon
procurement of all necessary entitlements, it is anticipated that the project will be developed by a joint venture between us, Kan Am, Empire Ltd., and Bennett S. Lazare.
The partners' respective ownership interests will be Mills-53.3%, Kan Am-26.7%, Empire Ltd.-14%, and Bennett S. Lazare-6%. The project's equity requirements have not yet been determined. Kan Am
has committed to contribute approximately $70 million to the project in addition to its existing investment of $24 million, if it
proceeds as planned. At specified times following the tenth anniversary of the project's opening, either we or Kan Am can exercise a buy-sell provision. Pursuant to the
buy-sell provision, we can require Kan Am to sell to us, for cash or limited partnership units of the Operating Partnership at Kan Am's election, Kan Am's entire interest in the
partnership. Also, pursuant to the buy-sell provision, Kan Am can require us to acquire, for cash or limited partnership units of the Operating Partnership at our election, Kan Am's entire
interest in the partnership.

Recent Developments.On March 20, 2001, Donald T. DiFrancesco, the Acting Governor of New Jersey, announced his
support for our efforts to develop a Mills project in the State of New Jersey. He added, however, that he was concerned that the proposed Meadowlands Mills project could have significant negative
impacts on the wetlands areas within the Meadowlands, and he noted other environmental concerns. Due to these concerns, he asked us to withdraw our permit application for the existing site, but
offered to work with us to find a suitable alternative site in Bergen County for the project. We believe that the proposed Meadowlands Mills project more than sufficiently mitigates the environmental
impacts that would result from its development. We believe that there is strong support for the development of Meadowlands Mills in Bergen County and are continuing our efforts to secure the various
permits and approvals required to commence construction at the existing location. However, we have accepted the Acting Governor's invitation to jointly explore alternative nearby sites having
acceptable visibility and access. These discussions are scheduled to begin in April of 2001.

Projects Under Review.In addition to the projects discussed above, we are also conducting due diligence on several
other proposed developments, including sites in Cleveland, Ohio; North Aurora,

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Illinois (Chicago); San Francisco, California; Boston, Massachusetts; and Tampa, Florida. We are also continuing to evaluate various prospective international sites, including a site identified in
Spain, with a concentrated focus on Western Europe, as well as other domestic sites for Mills-type and other retail oriented projects.

New Business Opportunities

The following is a brief description of new revenue generating opportunities that are related to, or are extensions of, our core business of developing,
redeveloping, leasing, financing and managing retail projects. We expect to grow this aspect of our business significantly during the next few years, subject to tax law limitations applicable to
REITs.

Investing in Retail and Entertainment Concepts.Historically, many new retail and entertainment concepts have been
developed at the Mills. A recent example is FoodBrand, an entity that is owned MEI, which was created in 1999 to master lease and operate food courts at our malls. Initial operations in 1999 existed
at Katy Mills and Franklin Mills. In 2000, the operations expanded into Opry Mills and Arundel
Mills. Other opportunities for expansion and growth exist at future projects under development. We believe we have additional opportunities for investment in our own development pipeline where we view
the risk of food court operations as similar to our real estate developments but where we expect to earn superior returns.

Capital Strategies

To fund our capital needs, we have generally utilized project specific secured financing, joint venture equity contributions, cash flow from operations and our
line of credit. New development is financed with construction loans, tax increment municipal financing and joint venture partner equity contributions. After project openings, the properties are
refinanced with permanent debt in the form of non-recourse, fixed rate mortgage debt. A description of our capital cycle and the various funding sources utilized follows.

Development Financing.A typical Mills project will cost approximately $200 to $250 million to build. Approximately 65% to 75%
of this cost is funded with a construction loan, provided by a bank group led by an agent bank. This financing is obtained after a substantial portion of the equity contributions to a project have
been made and is based upon the achievement of certain levels of pre-leasing. We have relationships with multiple lenders in the construction loan market. Our construction loans generally
have terms of three years, some with extension options for an additional two years. Interest rates typically range from 120 to 275 basis points over LIBOR. The construction loans are typically
guaranteed by us and our joint venture partners other than Kan Am, and are generally obtained on a several and not joint basis. When Kan Am is a partner in a project, we and our other joint venture
partners, on a pro rata basis, guarantee Kan Am's portion of the construction debt in addition to our own portions. See "Strategic Relationships." Guarantees are generally reduced incrementally after
completion of a project based upon the achievement of interest coverage ratios (ranging from 1.0 to 1.5).

In
addition to construction debt, we have historically been able to obtain tax increment financing to fund infrastructure costs (including roads, traffic signals and interstate on and
off ramps). This financing generally takes the form of bonds that are issued by the local municipality in which our project is located, and the capital is advanced as the infrastructure improvements
are constructed. This financing is advantageous to us because debt service is typically paid from special tax assessments levied against the project which are passed on to the tenants as part of their
contractual leases, or from sales tax revenues generated by the project and paid by shoppers. We have been successful in obtaining this form of financial assistance because our projects typically
create new jobs and generate large sales

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revenues, much of which comes from outside the municipality and is therefore beneficial to the municipality.

The
remainder of the cost of a development project is funded with equity contributed by us and our joint venture partners. See "Strategic Relationships." These equity contributions
fund the initial development costs prior to the funding of the construction loan. Our share of required equity is funded with cash from operations, including proceeds from land sales, our
$75 million line of credit and proceeds from any corporate debt or equity offerings.

Permanent Financing.After a new project opens and stabilizes (generally within 24 months of opening), we
generally refinance the construction loan with permanent, fixed rate, non-recourse mortgage debt. This debt usually has a five to ten-year term and is amortized over
30 years. We have found that the credit of our tenants and the stable nature of the property cash flows make our projects attractive collateral for a number of real estate lenders, including
commercial banks, life insurance companies and investment banks (in the form of commercial mortgage backed securitizations). When refinancing a construction loan, we have historically achieved
investment grade ratings on the entire refinanced balance. The refinancings of Ontario Mills, Grapevine Mills and Arizona Mills are examples of projects that are encumbered by permanent investment
grade securitized mortgage loans. As of December 31, 2000, our indebtedness had a weighted average maturity of 4.0 years and a weighted average interest rate of 8.12%, including our
share of funded construction and operating debt of the unconsolidated joint ventures. We intend to permanently finance our future projects in a similar manner.

Strategic Relationships

We have formed strategic relationships with certain developers and equity partners. These relationships serve as a source of equity for new development
projects, mitigate development risk and competition and provide assistance in the identification of new development opportunities and the development and expansion of tenant and lender relationships.
The following is a brief description of our contractual strategic partnerships.

Simon Property.In November 1995, we entered into an agreement with Simon Property pursuant to which we agreed
to examine with Simon Property the feasibility of developing Mills projects in eight specified markets. Since entering into this agreement, we have jointly, with Simon Property, developed Ontario
Mills in Ontario, California, Grapevine Mills in Grapevine, Texas, Arizona Mills in Phoenix, Arizona, Concord Mills in Charlotte, North Carolina, and Arundel Mills in Anne Arundel County, Maryland.
The agreement generally provides that when Simon Property jointly develops a Mills project with us, each party will hold equal interests and will be required to contribute needed equity on a pro rata
basis. The agreement restricts Simon Property from developing any Mills type project unless it first offers to us the right to participate equally in such development. In exchange, the agreement also
restricts us from developing a Mills project in 25 specified metropolitan areas in which Simon Property has major mall investments without first offering to Simon Property the right to participate
equally in such development. These restrictions extend through December 2003. The agreement also prohibits Simon Property from acquiring more than 800,000 shares of our common stock, acquiring
representation on our Board of Directors or from hiring specified members of our senior management without our prior written approval.

Taubman Realty.In May 1998, we entered into an agreement with Taubman Realty (a member of our joint venture
that developed Arizona Mills) to jointly develop four Mills projects during the initial five-year period of the term and a total of seven Mills projects in the ten-year term.
The agreement establishes ownership percentages for each project, and contemplates that the partners will contribute their pro rata share of the equity required for such projects. The agreement
requires that each partner

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approve major decisions on the venture, and requires the partners to share responsibility for developing, leasing and managing the projects.

Kan Am.We have a long-standing relationship with Kan Am, a German syndicator of closed U.S. real estate
funds which currently manages about $650 million in equity for approximately 5,000 German investors. Over the last four years, Kan Am has invested approximately $286 million in equity in
various projects with us. To date, Kan Am has never failed to raise the agreed upon level of capital.

In
addition to its existing investments at the property level, Kan Am owns approximately 34.0% of the partnership units of the Operating Partnership, which are freely exchangeable on
a one-to-one basis for our common stock. Directors and executive officers of Kan Am hold three seats on our Board of Directors.

In
February 1999, we received from Kan Am a commitment that Kan Am would use its best efforts to raise capital to invest in joint ventures with us over a five-year
period. Pursuant to this commitment, in exchange for interests in the applicable partnerships, Kan Am: contributed $25 million to Concord Mills Limited Partnership; contributed
$35 million to Arundel Mills Limited Partnership; and agreed to contribute $70 million to Sugarloaf Mills Limited Partnership.

We
and Kan Am are negotiating a modification to the February 1999 arrangement by which Kan Am would guarantee funding of $50 million in each of 2001 and 2002 for
investment in qualifying development projects, and would agree to use its best efforts to contribute additional capital in such years for similar purposes. We expect that the terms of our future
arrangements with Kan Am will be similar to Kan Am's historical capital contributions in our projects. We and Kan Am will each receive a preferred return on our qualifying equity. Historically, the
rate of such preferred return has been 9%. The remaining cash flow will be split pro rata per the respective sharing percentages, which are determined on a venture-by-venture
basis. We and other joint venture partners will guarantee Kan Am's preference until such time as qualified permanent financing is secured for the project. We (and, in certain cases, other joint
venture partners on a specific project) guarantee Kan Am's portion of construction debt.

Kan
Am must raise capital from other investors to meet its funding commitments to us and there can be no assurance that Kan Am will be able to raise such additional capital necessary
to enable it to meet such best efforts funding commitments.

As
of December 31, 2000, Kan Am has property level investments in seven existing projects, Ontario Mills, Grapevine Mills, The Block at Orange, The Oasis at Sawgrass, Concord
Mills, Katy Mills and Arundel Mills, and is currently a partner in our project under construction, Discover Mills. In addition, Kan Am is participating with us in our efforts to develop the
Meadowlands Mills site near Carlstadt, New Jersey.

Cambridge Shopping Centres Limited.In October 1999, we entered into a Master Agreement with Cambridge Shopping
Centres Limited ("Cambridge") pursuant to which we agreed to examine with Cambridge the feasibility of jointly acquiring, owning, developing, constructing and operating one or more Mills projects in
the Provinces of Ontario, Quebec, Alberta and/or British Columbia or Block projects in any Province in Canada. Pursuant to the agreement, we and Cambridge have jointly acquired the site in Vaughan,
Ontario and are examining the feasibility of several other locations. The agreement generally provides that when Cambridge jointly develops a site with us, the parties will hold their interests as
tenants-in-common having equal interests. The agreement restricts either party from developing a Mills project in the four specified Provinces or from developing a Block
project anywhere in Canada without first offering to the other party the right to participate equally in such development. The agreement also prohibits either party from developing a Mills project
within a fifty mile radius of any other project developed by the parties, and from developing any other project having a gross leasable area in excess of 400,000 square feet within a ten mile radius
of any such project unless such

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project shall have been approved by the other party. The term of this agreement extends through December 31, 2005, unless otherwise agreed by the parties.

In
February 2001, Ivanhoe Inc. merged with Cambridge Shopping Centres Limited. The new organization, to be known as Ivanhoe Cambridge, is one of North America's major
property owners, managers, developers and investors.

Asset Management Strategies

We believe that the property operating income provided by our existing assets is a stable, predictable source of cash flow from which to fund our corporate
endeavors, including the development of new projects and the payment of distributions to shareholders. All of our Mills have experienced stable, moderate growth in standard measures of real estate
operating performance. We believe these results are attributable to our ability to optimize our tenant mix, actively manage and promote our assets to
tenants and consumers, and maintain the high standards of our physical assets while maintaining low tenant occupancy costs.

Optimization of Tenant Mix.Our management actively manages and leases the properties with the goal of maintaining a
fresh and exciting tenant mix that continues to appeal to consumers over time. Below are examples of our management's recent efforts in this regard.



Active Management and Promotion of Properties to Tenants and Consumers.As a result of the performance of our
properties and our strong relationships with retailers, the Mills have had a high degree of tenant retention. During 2000, for example, 80% of the expiring specialty store gross leasable area was
renewed by the existing tenants.

We
generally obtain favorable lease terms as evidenced by the long duration of our leases, their fixed rent steps and their percentage rent provisions.

Anchor
leases, which generally represent approximately 60% of the gross leasable area of any individual project, generally have a ten-year term with a series of
five-year options exercisable at the tenant's discretion. Specialty store leases generally range from three to seven years in term. As of

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December 31, 2000, the weighted average lease maturity for our existing portfolio of leases was 6.8 years.

Our
leases generally provide for the payment of a fixed base rent as well as an additional rent based upon sales levels achieved by the tenant. The lease agreements also typically
provide for base rental increases either in the form of fixed rate step ups or consumer price index increases.

We
promote our Mills to consumers by spending $1.0 million to $2.5 million annually per Mills on advertising aimed at consumers. Our success in this program is evidenced
by the following:



Maintenance of High Standards of Physical Assets and Low Tenant Occupancy Costs. We believe our properties are well maintained
physically. To ensure a high quality shopping experience for our customers, in addition to our regular recurring maintenance program, we invested an additional $120.1 million in renovation and
expansion projects in our assets from 1996 to 2000.

While
continuing the high appearance standard and maintenance level of our properties, we have maintained an affordable cost of occupancy for our tenants. During 2000, specialty store
cost of occupancy for the seven Mills opened for a full year or more totaled 11.7%. (The industry average for specialty store cost of occupancy for 1997 was 12.9%, according to Urban Land Institute
Dollars & Cents Shopping Centers: 1998).

Development Strategy

Proven Track Record.Since our initial public offering in April 1994, we have developed and opened seven new
Mills projects and one new Block project, adding a total of approximately 8.9 million square feet of new gross leasable area to our portfolio at a total cost of approximately
$1.6 billion. Each of these projects was completed on time and under budget, with strong occupancy levels as outlined below:

|Project             |  | Date Opened    |  | Occupancy at
Opening (1) |   | Occupancy at
December 31, 2000 (1) |  
|------------------- |  | -------------- |  | ------------------------ | - | ---------------------------------- | -
|Ontario Mills       |  | November 1996  |  | 91.3                     | % | 97.8                               | %
|Grapevine Mills     |  | October 1997   |  | 91.8                     |   | 96.5                               |  
|Arizona Mills       |  | November 1997  |  | 92.6                     |   | 98.4                               |  
|The Block at Orange |  | November 1998  |  | 88.5                     |   | 95.1                               |  
|Concord Mills       |  | September 1999 |  | 88.4                     |   | 94.1                               |  
|Katy Mills          |  | October 1999   |  | 91.2                     |   | 91.9                               |  
|Opry Mills          |  | May 2000       |  | 92.4                     |   | 96.9                               |  
|Arundel Mills       |  | November 2000  |  | 87.5                     |   | 87.6                               |  

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Disciplined Approach.We intend to complete one to two new development projects per year, depending on market
conditions and capital availability. We employ what we consider to be a highly

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disciplined approach to the development process. Our in-house development team consists of several senior officers who are responsible for all aspects of development, including market
research, site selection, predevelopment, construction and tenant coordination. We maintain strict asset management control through the entire development process, including frequent internal reviews
of costs and leasing status.

To
mitigate development risk, we have adopted a number of procedures, including the following:



Additional Factors

Seasonality.The regional shopping center industry is seasonal in nature, with mall tenant sales peaking in the fourth
quarter due to the holiday season. As a result, a substantial portion of the percentage rent is not paid until the fourth quarter. Furthermore, most new lease-up occurs towards the later
part
of the year in anticipation of the holiday season and most vacancies occur toward the beginning of the year. In addition, the majority of the temporary tenants take occupancy in the fourth quarter.
Accordingly, cash flow and occupancy levels are generally lowest in the first quarter and highest in the fourth quarter. This seasonality also impacts the quarter-by-quarter
results of net operating income and funds from operations, although this impact is largely mitigated by recognizing minimum rent on a straight-line basis over the term of related leases in
accordance with GAAP.

Environmental Matters.We believe that our properties are in compliance in all material respects with all federal,
state and local ordinances and regulations regarding hazardous or toxic substances. We are not aware of any environmental condition which we believe would have a material adverse effect on our
financial condition or results of operations (before consideration of any potential insurance coverage). Nevertheless, it is possible that there are material environmental liabilities of which we are
unaware. Moreover, no assurances can be given that (i) future laws, ordinances or regulations will not impose any material environmental liability or (ii) the current environmental
condition of our properties have not been or will not be affected by tenants and occupants of our properties, by the condition of properties in the vicinity of our properties or by third parties
unrelated to us.

Limited
quantities of asbestos containing materials are present in certain of our properties. The asbestos containing materials found are generally non-friable (meaning
that the asbestos containing materials are not easily crumbled and thus are less likely to release asbestos fibers into the air), in good condition and are unlikely to be disturbed. With certain
exceptions, these asbestos containing materials will be removed by us in the ordinary course of renovation or reconstruction. Prior to removal, these asbestos containing materials will be monitored
and maintained by us in accordance with procedures established by the Environmental Protection Agency, the Occupational Safety and Health Administration and other applicable governmental authorities.

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Insurance.Our management believes that all of our properties are adequately covered by insurance.

Tax Status

We conduct our operations in a way intended to qualify us as a REIT under the Internal Revenue Code of 1986 (the "Code"). As a REIT, we generally will not be
subject to federal and state income taxes on our net taxable income that we currently distribute to stockholders. Qualification and taxation as a REIT depends on our ability to meet certain dividend
distribution tests, share ownership requirements and various qualification tests prescribed in the Code.

Risk Factors

You should be aware that there are various risks associated with the Company and its business, including the ones discussed below. You should carefully
consider these risk factors, as well as the other information contained in this Form 10- K, in evaluating the Company and its business.

Price Fluctuations Of The Common Stock And Trading Volume; Shares Available For Future Sale

A number of factors may adversely influence the price of the Company's Common Stock in the public markets, many of which are beyond the control of the Company.
These factors include possible increases in market interest rates, which may lead purchasers of Common Stock to demand a higher annual yield from distributions by the Company in relation to the price
paid for Common Stock, the relatively low daily trading volume of REITs in general, including the Common Stock and any inability of the Company to invest the proceeds of a future offering of
Securities in a manner that will increase earnings per share. Sales of a substantial number of shares of Common Stock, or the perception that such sales could occur, could adversely affect prevailing
market prices for shares. The Company also may issue shares of Common Stock upon redemption of units issued in connection with the formation of the Company, its initial public offering ("IPO") and the
acquisition by the Company of its assets in April 1994 (collectively, the "Formation Transactions"). In addition, 4,500,000 shares of Common Stock of the Company have been issued or reserved
for issuance pursuant to the Company's Amended and Restated 1994 Executive Equity Incentive Plan, and 2,500,000 shares of Common Stock have been reserved for issuance pursuant to the Company's 1999
Stock Option Plan. These shares, upon issuance, will be available for sale in the public markets from time to time pursuant to exemptions from registration requirements or upon registration. As of
December 31, 2000, options to purchase 4,755,807 shares of Common Stock and 608,432 shares of restricted stock had been granted or authorized to be
granted to certain directors, officers and employees of the Company and its subsidiaries and remained outstanding as of March 20, 2001. No prediction can be made about the effect that future
sales of Common Stock will have on the market prices of shares.

Risks Relating To Debt

As of December 31, 2000 the Company had total debt of approximately $1.5 billion (including its pro rata share of unconsolidated joint venture
debt). The Company is subject to the risks normally associated with debt financing, including the risk that its cash flow will be insufficient to meet required payments of principal and interest. If a
property is mortgaged to secure payment of indebtedness and the Company is unable to meet mortgage payments, the mortgagee could foreclose upon the property, appoint a receiver and receive an
assignment of rents and leases or pursue other remedies, all with a consequent loss of income and asset value to the Company. Foreclosures could also create taxable income without accompanying cash
proceeds, thereby hindering the Company's ability to meet the real estate investment trust distribution requirements under the Internal Revenue Code of 1986, as amended (the "Code").

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The Company's substantial debt also means that there is a risk the Company will have insufficient cash flow to make dividend or redemption payments on the Securities.

Because
the terms of most of the Company's indebtedness do not require any principal payments prior to maturity, and the Company does not anticipate making any such payments prior to
maturity, it may be necessary to refinance or repay such indebtedness either through additional secured or unsecured debt financing, private or public debt issuances, additional equity offerings or
sales of assets. If prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, the interest expense relating to such refinanced
indebtedness would increase, which would adversely affect the Company's funds from operations and the amount of distributions it can make to its stockholders. If the Company were unable to secure
refinancing of the mortgage indebtedness encumbering a property on acceptable terms, the Company might be forced to dispose of such property upon disadvantageous terms, which might result in losses to
the Company, thereby adversely affecting funds from operations and cash available for distribution by the Company to its stockholders.

The
Company is developing and plans to continue to develop new retail properties, including new Mills. The funds necessary to construct and develop new properties must be obtained
through additional equity or debt securities offerings, conventional third-party debt financing, participating loan arrangements or joint venture arrangements. There can be no assurance that the
Company will obtain the financing necessary to fund new development and expansion projects. In addition, the additional debt service payments required in respect of any additional debt incurred, and
the dilutive effect of any
additional equity securities issued to finance future development, could adversely affect the Company's ability to make distributions to its stockholders.

The
Company anticipates that any new projects, some of which could be developed through joint venture arrangements, would be financed through lines of credit or other forms of secured
or unsecured construction financing which generally carry a floating interest rate. Although the Company could hedge or cap all of such construction financing, no assurance can be given that the
Company would be able to obtain permanent debt or equity financing on acceptable terms to refinance such construction loans upon substantial completion of the project or that the Company would be able
to hedge or cap its debt on economically viable terms. As a result, the floating interest rate on the construction loans could be outstanding for a longer period of time than anticipated at the time
of borrowing, resulting in the curtailment of development activities or a decrease in the amount of cash available for distribution to stockholders. If the Company had construction loans outstanding
and interests rates were to increase, the Company's debt service for floating rate construction loans would increase (but not in excess of the applicable cap rate), thereby adversely affecting the
Company's financial condition and results of operations.

Dependence on Joint Venture Partners and Others for Financing Development and Expansion Activities

Mills plans to contribute to develop new retail properties and concepts. All of Mill's current and planned development projects are through joint ventures,
primarily with Simon Property, Taubman Realty or Kan Am. Mills' planned level of development activity depends on the continuation of its relationships with these partners, their continued interest in
participating in this activity, and on their ability to finance their obligations to the joint venture, all of which are outside of the control of Mills. In particular, Kan Am raises investor capital
to fund its equity commitments for projects on a project-by-project basis. Mills cannot guarantee that Kan Am will be able to raise capital for any particular project in
accordance with its commitment for such project. If one or more joint venture partners terminated its relationship with Mills, or failed to perform as expected, Mills may not be able to find another
viable partner and, in such event, would be required to decrease development activity and curtail planning for new projects.

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Joint Venture Partners' Rights to Participate in Project Management

Joint venture partners often share control over the operation of the joint venture assets. Although Mills generally seeks to maintain sufficient control of any
joint venture to permit its objectives to be achieved, Mills is not able to take specified significant actions without the approval of joint venture partners, including, for example, the sale or
refinancing of the joint ventures' property, the approval of annual budgets, entering into specified transactions with affiliates and settling litigation above specified thresholds.

Actions
by a joint venture partner could subject such assets to additional risk. Mills' joint venture partner in an investment might have economic of business interests or goals that
are inconsistent with Mills interests or goals, or be in a position to take action contrary to Mills' instructions or requests or contrary Mills' policies or objectives. Also, Mills' joint venture
partners could take actions binding on the joint venture without consent. Finally, a joint venture partner could go bankrupt, leaving Mills liable for its share of joint venture liabilities.

Influence Of Officers, Directors And Significant Stockholders

The executive officers of the Company and Kan Am and its affiliates, which is substantially owned and controlled by three directors of the Company (the "Kan Am
Directors"), and their respective affiliates directly and indirectly own a substantial percentage of the total Common Stock and Units outstanding. The Units not held by the Company are exchangeable
for Common Stock or, at the option of the Company as sole general partner of the Operating Partnership, the cash equivalent of that number of shares of Common Stock. Interested directors may not vote
on whether to elect to pay cash in exchange for Units in which they have a direct or indirect interest. Various directors of the Company, including the Kan Am Directors, have substantial influence on
the Company and, by virtue of their ownership of Common Stock, on the outcome of any matters submitted to the Company's stockholders for approval. The interests of such executive officers and Kan Am
Directors might not be consistent with the interests of all other stockholders, and they may use their voting influence contrary to the stockholders' interest. Although there is no understanding or
arrangement for these stockholders and their affiliates to act together on any matter, such stockholders would be in a position to exercise significant influence over the affairs of the Company if
they were to act together. In the event that all or a substantial portion of such Units are exchanged for shares of Common Stock, such persons will increase their influence over the Company and on the
outcome of any matters submitted to the Company's stockholders for approval. The influence and voting power of the remaining stockholders would be correspondingly limited.

The
Company, as the sole general partner of the Operating Partnership, may have certain fiduciary responsibilities to the other partners in the Operating Partnership which may
conflict with the interests of the stockholders of the Company (including decisions regarding the sale or refinancing of the Mills' properties and the timing and amount of distributions from the
Operating Partnership). In addition, those individuals and entities (including the executive officers of the Company, the Kan Am Directors and their respective affiliates) that hold Units may have
certain limited rights in decisions affecting the Operating Partnership that may conflict with the interests of those individuals and entities that purchase shares of Preferred Stock in this offering.
In particular, a holder of Units may suffer different and/or more adverse tax consequences than the Company upon the sale or refinancing of some of the properties as a result of unrealized gain
attributable to certain properties or the tax status of the Unit holder. These Unit holders and the Company, therefore, may have different objectives regarding the appropriate pricing and timing of
any sale or refinancing of the Properties. Although the Company, as the sole general partner of the Operating Partnership, has the exclusive authority as to whether and on what terms to sell or
refinance an individual property, these Units holders might seek to influence the Company not to sell or refinance the properties, even though such sale might otherwise be financially

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advantageous to the Company, or may seek to influence the Company to refinance a property with a higher level of debt than would be in the best interests of the Company.

The
Kan Am Directors and their respective affiliates also may have interests that may conflict with the interests of the stockholders of the Company in connection with Kan Am's joint
ventures with the Operating Partnership to develop, own, and operate additional properties.

General Risks Of Developing And Operating Retail Shopping Centers

The Company intends from time to time to develop new Mills or expand existing Mills, and may engage in the development of other retail or related mixed use
projects, as such opportunities arise. Such projects generally require significant expenditures of capital and are frequently dependent on obtaining various forms of government and other approvals,
the receipt of which cannot be assured. In addition, while policies with respect to development activities are intended to limit some of the risks otherwise associated with development, the Company
nevertheless would incur development risks in connection with any such project, including expenditures of funds for, and devotion of management's time to, projects which may not be developed on a
timely basis or at all. Accordingly, there can be no assurance if or when any development of new Mills, other retail or related mixed use projects or expansions of existing properties would be
completed, or if completed, that the costs of development or expansion would not exceed, by a material amount, projected costs.

The
Company's income and cash available for distribution would be adversely affected if multiple tenants were unable to meet their obligations. In the event of default by a tenant,
the Company may experience delays in enforcing its rights as lessor and may incur substantial costs in protecting its investment. Moreover, at any time, certain of the Company's tenants including
anchor store tenants may seek the protection of the bankruptcy laws, which could result in the termination of such tenants' leases and, if followed by their closing or by their sale to less desirable
retailers, could adversely affect customer traffic in a center and thereby reduce the income generated by that center. Furthermore, certain of the Company's tenants, including anchor tenants, hold the
right under their leases to terminate their leases or reduce their rental rate if certain occupancy conditions are not met, if certain anchor tenants are closed, if certain sales levels are not
achieved, or if an exclusive use provision is violated.

The
Company's income and cash available for distribution also would be adversely affected if the Company were unable either to rent unleased space in the properties or to relet space
after the expiration of a tenant's lease on economically favorable lease terms. The ability of the Company to rent or to relet space in the properties is affected by many factors, including covenants
contained in leases with certain tenants in the properties restricting the use of other space at the properties. The Company's tenants generally enter into leases with an initial term ranging from
five to 15 years. No assurance can be given that any tenant whose lease expires in the future will renew its lease at that time, or on economically favorable terms, or that the Company will be
able to find a replacement
tenant. The failure by the Company to rent unleased space on a timely basis or at all would likely adversely affect the Company's financial condition and results of operations. The Company may also
incur costs in making improvements or repairs to property required by a new tenant.

There
are other companies that are engaged in the development or ownership of value retail properties that compete with the Company in seeking tenants. This results in competition for
acquisition of prime locations and for tenants who will lease space in the value retail properties that the Company and its competitors own or operate. The development of new super-regional malls or
other retail shopping centers with more convenient locations or better rents may attract the Company's tenants or cause them to seek more favorable lease terms at or prior to renewal, and may
accordingly adversely affect the business, revenues or value of the properties.

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General Risks Of Equity Real Estate Investments

Real property investments are subject to varying degrees of risk. The economic performance and value of a property are affected by a number of factors,
including: the national economic climate; the regional economic climate (which may be adversely impacted by plant closings, industry slowdowns and other factors); local real estate conditions such as
an oversupply of retail space or a reduction in demand for real estate in the area; the attractiveness of the properties to tenants; competition from other available space; the quality of maintenance,
insurance and management services; and increased operating costs. In addition, other factors may adversely affect a property's value, including changes in government regulations and other laws, rules
and regulations governing real estate, zoning or taxes, changes in interest rate levels, the availability of financing and potential liability under environmental and other laws.

Equity
real estate investments are relatively illiquid and therefore tend to limit the ability of the Company to vary its portfolio promptly in response to changes in economic or
other conditions. All of the properties are in the same line of business. In addition, certain significant expenditures associated with each equity investment (such as debt service, real estate taxes
and operating and maintenance costs) are generally not reduced when circumstances cause a reduction in income from the investment. If any property fails, the ability to convert the property to an
attractive alternative use or to sell the property to recoup the Company's investment may be limited. Should any of the foregoing events occur, the Company's income and cash flows would be adversely
affected.

Under
various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or may have arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, may become liable for the costs of removal or remediation of certain hazardous substances released on or in its properties or disposed of by
it, as well as certain other potential costs which could relate to hazardous or toxic substances. Such laws often
impose such liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The failure to remediate properly such substances may
adversely affect the owner's ability to sell such real estate or to borrow using such real estate as collateral. Such costs or liabilities may exceed the value of such real estate.

The
Company carries comprehensive liability, fire, flood, extended coverage and rental loss insurance with respect to its properties with policy specifications and insured limits that
it believes are customary for similar properties. The Company also carries comprehensive earthquake and pollution cleanup coverage on all its properties. With respect to the Mills only, the Company
carries off-premises power coverage and with respect to Sawgrass Mills only, the Company carries sinkhole coverage. There are certain types of losses (generally of a catastrophic nature,
such as wars or other acts of God) which may be either uninsurable or not economically insurable. Should an uninsured loss occur with respect to a property, the Company could lose both its invested
capital in and anticipated profits from the property.

The
Company has invested and expects in the future to invest in certain instances as a co-venturer or partner in the development of new properties, instead of developing
projects directly. Such investments may involve risks not present in a wholly-owned development project, including the absence of exclusive control over the development, financing, leasing, management
and other aspects of the project and the possibility that the Company's co-venturer or participating lender might become bankrupt, have interests or goals that are inconsistent with those
of the Company, take action contrary to the instructions, requests or interests of the Company or otherwise impede the Company's objectives. The Operating Partnership may also have fiduciary
responsibilities to the other investors which may conflict with the interests of the Company's stockholders.

22

---

Risks Relating To Control Of The Company

The major policies of the Company, including its policies with respect to development, acquisitions, financing, growth, operations, debt capitalization and
distributions, are determined by the Company's Board of Directors. The Board of Directors may revise these and other policies from time to time, subject to certain limitations, without the approval of
stockholders. Accordingly, stockholders have little control over changes in policies of the Company other than its policy of maintaining its qualification as a REIT. A change in these policies could
adversely affect the Company's financial condition or results of operations.

Certain
provisions in the Amended and Restated Certificate of Incorporation of the Company (the "Certificate of Incorporation") and the Amended and Restated Bylaws of the Company (the
"Bylaws") may have the effect of discouraging a third party from making an acquisition proposal for the Company and may thereby have the effect of impeding a change in control of the Company under
circumstances
that could give the holders of Common Stock the opportunity to realize a premium over the then prevailing market price. The Certificate of Incorporation further authorizes the Board of Directors to
issue up to 20,000,000 shares of Preferred Stock, and to establish the preferences and rights (including the right to vote and the right to convert into Common Stock) of any shares of Preferred Stock
issued. The power to issue Preferred Stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the best interests of the
stockholders. The ownership limit also may have the effect of precluding acquisition of control of the Company by a third party even if a change in control were in the best interests of the
stockholders. In addition, the Board of Directors of the Company has three classes of directors. Directors for each class are chosen for a three-year term upon the expiration of the
current class' term. The staggered terms for directors may affect the stockholders' ability to change control of the Company even if a change in control were in the stockholders' best interest

Matters Relating to Qualifications as a REIT

There can be no assurance that Mills actually qualifies as a REIT or will continue to qualify as a REIT. Many of the REIT requirements are highly technical and
complex, and depend on various factual matters and circumstances that may not be totally within Mills' control. Any determination that Mills does not qualify as a REIT would have a material adverse
effect on Mills' results of operations. Even if Mills does continue to qualify as a REIT, new tax rules or legislation may change the way Mills is taxed. In addition, for Mills to qualify as a REIT,
ownership of Mills' capital stock by any one individual is generally limited to 5% of the outstanding capital stock, and any transfer that would cause the transferee to violate this limit will be void
or will result in the transferred shares being converted into shares of stock that are non-voting and that may not participate in distributions.

23

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Item 2. Properties

The following tables set forth certain information relating to our properties as of December 31, 2000. The Company holds title to the properties or
directly or indirectly holds 100% of the general and limited partnership interests in the partnerships that own Potomac Mills, Franklin Mills, Sawgrass Mills (Phases I and II) and Gurnee Mills.
The Operating Partnership also owns, directly or indirectly, interests as both a general partner and a limited partner in the joint ventures that own the following properties: Ontario Mills (50%),
Grapevine Mills (37.5%), Arizona Mills (36.8%), The Block at Orange (50%), The Oasis at Sawgrass (50%), Concord Mills (37.5%), Katy Mills (62.5%), Opry Mills (66.7%) and Arundel Mills (37.5%). The
Operating Partnership has also formed joint ventures to develop additional properties. We and our joint venture partners are entitled to a 9% preferred return on each of our qualified capital
contributions and any remaining cash flow is distributed in accordance with each partners' respective ownership interests.

24

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SUMMARY OF PROPERTIES

The following table sets forth certain information with respect to the Mills, the Block and the Community Center as of December 31, 2000:

|Name/
Location      |  | Metropolitan
Area
Served          |  | Year
Opened/
Acquired |  | Approx.
GLA
(Sq.Ft.) (1) |  | Percent
Leased (2) |   | Annualized
Base
Rent (3) |            | No. of
Anchor
Stores (4) |    | Anchor Store Tenants
|------------------- |  | --------------------------------- |  | --------------------- |  | ------------------------ |  | ------------------ | - | ------------------------ | ---------- | ------------------------ | -- | --------------------
|MILLS Potomac Mills |  | Washington D.C./Baltimore         |  | 1985                  |  | 1,635,591                |  | 98                 | % | $                        | 22,979,703 |                          | 19 |                     
|Franklin Mills      |  | Philadelphia/ Wilmington          |  | 1989                  |  | 1,739,480                |  | 96                 |   |                          | 18,738,180 |                          | 19 |                     
|Sawgrass Mills      |  | Fort Lauderdale/ Miami/Palm Beach |  | 1990                  |  | 1,849,159                |  | 99                 |   |                          | 27,089,033 |                          | 20 |                     
|Gurnee Mills        |  | Chicago/ Milwaukee                |  | 1991                  |  | 1,699,808                |  | 97                 |   |                          | 18,262,971 |                          | 16 |                     
|Ontario Mills       |  | Los Angeles                       |  | 1996                  |  | 1,471,096                |  | 98                 |   |                          | 20,411,794 |                          | 23 |                     
|Grapevine Mills     |  | Dallas/ Fort Worth                |  | 1997                  |  | 1,547,611                |  | 97                 | % | $                        | 21,944,926 |                          | 20 |                     

25

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SUMMARY OF PROPERTIES, Continued

|Name/
Location        |  | Metropolitan
Area
Served          |  | Year
Opened/
Acquired |  | Approx.
GLA
(Sq.Ft.) (1) |  | Percent
Leased (2) |  | Annualized
Base
Rent (3) |  | No. of
Anchor
Stores (4) |  | Anchor Store Tenants                                                                                                                                                                                                                                                                                                    
|--------------------- |  | --------------------------------- |  | --------------------- |  | ------------------------ |  | ------------------ |  | ------------------------ |  | ------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Arizona Mills         |  | Phoenix                           |  | 1997                  |  | 1,227,564                |  | 98                 |  | 20,151,140               |  | 16                       |  | Burlington Coat Factory, Group USA, Harkin's Great Mall Cinemas, Hi-Health World of Nutrition, Hilo Hattie, J.C. Penney, Last Call-Nieman Marcus, Linens' N Things, Marshalls, Off 5thSaks Fifth Avenue, Off Rodeo Drive, Oshman's Supersports,
Rainforest Cafe, Ross Dress for Less, Sega Gameworks, Virgin Megastores
|The Oasis at Sawgrass |  | Ft. Lauderdale/ Miami/ Palm Beach |  | 1999                  |  | 290,063                  |  | 90                 |  | 5,238,497                |  | 3                        |  | Regal Theatres, Ron Jon Surf Shop, Sega Gameworks                                                                                                                                                                                                                                                                       
|Concord Mills         |  | Charlotte                         |  | 1999                  |  | 1,260,655                |  | 94                 |  | 19,833,882               |  | 16                       |  | AC Moore Arts & Crafts, Alabama Grill, AMC Theatres, Bass Pro Shops Outdoor World, Bed, Bath & Beyond, Blacklion, Books-A-Million, Burlington Coat Factory, F.Y.E. (For Your Entertainment), Group USA, Jeepers, Jillian's, Off 5thSaks
Fifth Avenue, Old Navy, Sun & Ski Sports, T.J. Maxx                            
|Katy Mills            |  | Houston                           |  | 1999                  |  | 1,189,726                |  | 92                 |  | 18,041,503               |  | 13                       |  | AMC Theatres, Bass Pro Shops Outdoor World, Bed, Bath & Beyond, Books-A-Million, Boot Town, Burlington Coat Factory, F.Y.E. (For Your Entertainment), Jillian's, Marshalls, Off 5thSaks Fifth Avenue, Old Navy, Rainforest Cafe, Sun & Ski
Sports                                                                      
|Opry Mills            |  | Nashville                         |  | 2000                  |  | 1,111,264                |  | 97                 |  | 21,888,305               |  | 15                       |  | Alabama Grill, Apple Barn, Barnes & Nobel, Bass Pro Shops Outdoor World, Bed, Bath & Beyond, Blacklion, Gibson Guitar, Jillian's, Off Broadway Shoes, Old Navy, Rainforest Cafe, Regal Theatre, Off-5th Saks 5th Avenue, Sun & Ski Sports,
Tower Records                                                                

26

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SUMMARY OF PROPERTIES, Continued

|Name/
Location                  |  | Metropolitan
Area
Served   |  | Year
Opened/
Acquired |  | Approx.
GLA
(Sq.Ft.) (1) |  | Percent
Leased (2) |   | Annualized
Base
Rent (3) |  | No. of
Anchor
Stores (4) |  | Anchor Store Tenants                                                                                                                                                                                         
|------------------------------- |  | -------------------------- |  | --------------------- |  | ------------------------ |  | ------------------ | - | ------------------------ |  | ------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Arundel Mills                   |  | Baltimore/ Washington, DC  |  | 2000                  |  | 1,011,023                |  | 88                 | % | $19,503,121              |  | 11                       |  | Bed, Bath & Beyond, Books-A-Million, Burlington Coat Factory, F.Y.E. (For Your Entertainment), Jillian's, Muvico Theatres, Off-5th Saks 5th Avenue, Off Broadway Shoes, Old Navy, Sun & Ski Sports, T.J. Maxx
|                                |  |                            |  |                       |  |                          |  |                    |   |                          |  |                          |  |                                                                                                                                                                                                              
|MILLS TOTALS/ WEIGHTED
AVERAGES |  |                            |  |                       |  | 16,033,040               |  | 96                 | % | $234,083,035             |  | 191                      |  |                                                                                                                                                                                                              
|                                |  |                            |  |                       |  |                          |  |                    |   |                          |  |                          |  |                                                                                                                                                                                                              
|The Block at Orange             |  | Los Angeles/ Orange County |  | 1998                  |  | 642,057                  |  | 95                 | % | 14,072,727               |  | 10                       |  | AMC Theatres, Borders Books and Music, Dave & Busters, Hilo Hattie, Mars Music, Off 5thSaks Fifth Avenue, Ron Jon Surf Shop, Sega Gameworks, Van's Skate Park, Virgin Megastores                            
|                                |  |                            |  |                       |  |                          |  |                    |   |                          |  |                          |  |                                                                                                                                                                                                              
|Liberty Plaza                   |  | Philadelphia               |  | 1994                  |  | 371,535                  |  | 97                 | % | $3,032,714               |  | 4                        |  | Dicks Clothing & Sporting Goods, Raymour & Flanigan, Super Fresh Food Market, Wall-Mart                                                                                                                      
|                                |  |                            |  |                       |  |                          |  |                    |   |                          |  |                          |  |                                                                                                                                                                                                              

---

27

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PROPERTY OPERATING INCOME (IN THOUSANDS, UNAUDITED)

The following table sets forth the property operating income for each of the Mills, the Block, Mainstreet (our push cart program), Community
Centers and the Net Lease Properties. The purpose of this table is to provide details about selected line items within our consolidated financial statements for the year ended December 31, 2000
and is not intended to be a representation of net income according to accounting principles generally accepted in the United States.

For the Twelve Months Ended December 31, 2000

Wholly Owned Properties

|                          |                          | Potomac                        |        | Franklin |        | Sawgrass |        | Gurnee |        | Mainstreet |        | Liberty
Plaza |        | Single
Tenant
Net Lease
Properties |       | Total
Without
Disposed
Properties(2) |       | Disposed
Properties(2) |       | Total
|------------------------- | ------------------------ | ------------------------------ | ------ | -------- | ------ | -------- | ------ | ------ | ------ | ---------- | ------ | ------------- | ------ | ---------------------------------- | ----- | ------------------------------------ | ----- | ---------------------- | ----- | -----
|Rental Revenues:          |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      
|                          | Minimum rent             |                                | $      | 22,417   |        | $        | 18,574 |        | $      | 26,056     |        | $             | 18,350 |                                    | $     | 3,947                                |       | $                      | 2,419 |      
|                          | Percentage rent          |                                |        | 320      |        |          | 406    |        |        | 1,200      |        |               | 490    |                                    |       | 361                                  |       |                        |      |      
|                          | Recoveries from tenants  |                                |        | 9,994    |        |          | 12,503 |        |        | 15,425     |        |               | 10,393 |                                    |       | 95                                   |       |                        | 706   |      
|                          | Other revenue            |                                |        | 1,695    |        |          | 1,286  |        |        | 4,056      |        |               | 1,969  |                                    |       | 723                                  |       |                        | 49    |      
|                          |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      
|                          |                          | Total rental revenues          |        |          | 34,426 |          |        | 32,769 |        |            | 46,737 |               |        | 31,202                             |       |                                      | 5,126 |                        |       | 3,174
|                          |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      
|Property Operating Costs: |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      
|                          | Recoverable from tenants |                                |        | 8,178    |        |          | 9,253  |        |        | 14,075     |        |               | 8,810  |                                    |       |                                     |       |                        | 854   |      
|                          | Other operating(1)       |                                |        | 398      |        |          | 806    |        |        | 660        |        |               | 894    |                                    |       | 2,309                                |       |                        | 95    |      
|                          |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      
|                          |                          | Total property operating costs |        |          | 8,576  |          |        | 10,059 |        |            | 14,735 |               |        | 9,704                              |       |                                      | 2,309 |                        |       | 949  
|                          |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      
|Property Operating Income |                          | $                              | 25,850 |          | $      | 22,710   |        | $      | 32,002 |            | $      | 21,498        |        | $                                  | 2,817 |                                      | $     | 2,225                  |       | $    
|                          |                          |                                |        |          |        |          |        |        |        |            |        |               |        |                                    |       |                                      |       |                        |       |      

Unconsolidated Joint Ventures

|                          |                          | Ontario                        |        | Grapevine |        | Arizona |        | The Block |        | The Oasis |        | Concord |        | Katy   |       | Opry  |       | Arundel |        | Other  |        | Total 
|------------------------- | ------------------------ | ------------------------------ | ------ | --------- | ------ | ------- | ------ | --------- | ------ | --------- | ------ | ------- | ------ | ------ | ----- | ----- | ----- | ------- | ------ | ------ | ------ | ------
|Rental Revenues:          |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       
|                          | Minimum rent             |                                | $      | 20,730    |        | $       | 23,959 |           | $      | 21,425    |        | $       | 16,721 |        | $     | 5,763 |       | $       | 20,510 |        | $      | 19,352
|                          | Percentage rent          |                                |        | 1,234     |        |         | 736    |           |        | 744       |        |         | 461    |        |       | 411   |       |         | 288    |        |        | 281   
|                          | Recoveries from tenants  |                                |        | 9,618     |        |         | 11,139 |           |        | 8,622     |        |         | 3,817  |        |       | 2,537 |       |         | 6,595  |        |        | 8,953 
|                          | Other revenue            |                                |        | 5,373     |        |         | 5,534  |           |        | 4,867     |        |         | 1,292  |        |       | 226   |       |         | 2,128  |        |        | 1,879 
|                          |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       
|                          |                          | Total rental revenues          |        |           | 36,955 |         |        | 41,368    |        |           | 35,658 |         |        | 22,291 |       |       | 8,937 |         |        | 29,521 |        |       
|                          |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       
|Property Operating Costs: |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       
|                          | Recoverable from tenants |                                |        | 8,704     |        |         | 9,352  |           |        | 7,932     |        |         | 4,840  |        |       | 2,482 |       |         | 6,023  |        |        | 8,633 
|                          | Other operating(1)       |                                |        | 1,989     |        |         | 550    |           |        | 812       |        |         | 1,124  |        |       | 720   |       |         | 537    |        |        | 941   
|                          |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       
|                          |                          | Total property operating costs |        |           | 10,693 |         |        | 9,902     |        |           | 8,744  |         |        | 5,964  |       |       | 3,202 |         |        | 6,560  |        |       
|                          |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       
|Property Operating Income |                          | $                              | 26,262 |           | $      | 31,466  |        | $         | 26,914 |           | $      | 16,327  |        | $      | 5,735 |       | $     | 22,961  |        | $      | 20,891 |       
|                          |                          |                                |        |           |        |         |        |           |        |           |        |         |        |        |       |       |       |         |        |        |        |       

---

28

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OCCUPANCY ANALYSIS

The following table sets forth occupancy analysis for our Mills, Liberty Plaza and the Block as of December 31, 2000.

|                |                       | Gross Leased and Occupied Area (Sq.Ft.)(1) |           | Gross Leased and Occupied Area,
Net of Anchors (Sq.Ft.)(2) |           | Total Vacant (Sq.Ft.)
|--------------- | --------------------- | ------------------------------------------ | --------- | ---------------------------------------------------------- | --------- | ---------------------
|
|Mills:          |                       |                                            |           |                                                            |           |                      
|                | Potomac Mills         |                                            | 1,635,591 |                                                            | 1,602,577 |                      
|                | Franklin Mills        |                                            | 1,739,480 |                                                            | 1,668,432 |                      
|                | Sawgrass Mills        |                                            | 1,849,159 |                                                            | 1,822,609 |                      
|                | Gurnee Mills          |                                            | 1,699,808 |                                                            | 1,642,254 |                      
|                |                       |                                            |           |                                                            |           |                      
|                |                       | Total Mills                                |           | 6,924,038                                                  |           | 6,735,872            
|                | Liberty Plaza         |                                            | 371,535   |                                                            | 359,644   |                      
|                |                       |                                            |           |                                                            |           |                      
|                |                       | Total Wholly Owned                         |           | 7,295,573                                                  |           | 7,095,516            
|                |                       |                                            |           |                                                            |           |                      
|Joint Ventures: |                       |                                            |           |                                                            |           |                      
|                | Ontario Mills         |                                            | 1,471,096 |                                                            | 1,439,313 |                      
|                | Grapevine Mills       |                                            | 1,547,611 |                                                            | 1,493,579 |                      
|                | Arizona Mills         |                                            | 1,227,564 |                                                            | 1,208,854 |                      
|                | Concord Mills         |                                            | 1,260,655 |                                                            | 1,186,063 |                      
|                | Katy Mills            |                                            | 1,189,726 |                                                            | 1,093,466 |                      
|                | Opry Mills            |                                            | 1,111,264 |                                                            | 1,076,306 |                      
|                | Arundel Mills         |                                            | 1,011,023 |                                                            | 885,974   |                      
|                | The Oasis at Sawgrass |                                            | 290,063   |                                                            | 260,365   |                      
|                | The Block at Orange   |                                            | 642,057   |                                                            | 610,628   |                      
|                |                       |                                            |           |                                                            |           |                      
|                |                       | Total Joint Ventures                       |           | 9,751,059                                                  |           | 9,254,548            
|                |                       |                                            |           |                                                            |           |                      
|                |                       | Total Mills                                |           | 16,033,040                                                 |           | 15,379,792           
|                |                       |                                            |           |                                                            |           |                      
|                |                       | Total Wholly Owned and Joint Ventures      |           | 17,046,632                                                 |           | 16,350,064           
|                |                       |                                            |           |                                                            |           |                      

---

29

---



LEASE EXPIRATION SCHEDULE (1)

The following table shows lease expirations assuming that none of the tenants exercise renewal options. Except as described in footnote (1), the minimum
rent is the monthly contractual minimum rent of the expiring leases as of December 31, 2000, multiplied by 12.

Wholly Owned Properties

|Lease
Expiration
Year |  | Number
of Leases
Expiring |  | Leased
Area in
Square Footage |  | Annualized Minimum
Rents
Under
Expiring Leases |            | Annualized Minimum
Rents
per
Square Foot |   | Percent of
Total Leased
Square
Footage
Represented by
Expiring Leases |  | Percent of
Total Minimum
Rents Represented
by Expiring
Expiring Leases |  
|--------------------- |  | ------------------------- |  | ----------------------------- |  | ---------------------------------------------- | ---------- | ---------------------------------------- | - | --------------------------------------------------------------------- |  | ---------------------------------------------------------------------- | -
|
|2001                  |  | 10                        |  | 582,818                       |  | $                                              | 4,037,864  |                                          | $ | 6.93                                                                  |  | 15.39                                                                  | %
|2002                  |  | 5                         |  | 167,786                       |  |                                                | 1,369,423  |                                          |   | 8.16                                                                  |  | 4.43                                                                   |  
|2003                  |  | 7                         |  | 411,050                       |  |                                                | 2,601,357  |                                          |   | 6.33                                                                  |  | 10.85                                                                  |  
|2004                  |  | 9                         |  | 421,103                       |  |                                                | 3,730,024  |                                          |   | 8.86                                                                  |  | 11.12                                                                  |  
|2005                  |  | 9                         |  | 407,586                       |  |                                                | 3,152,141  |                                          |   | 7.73                                                                  |  | 10.76                                                                  |  
|2006                  |  | 6                         |  | 322,419                       |  |                                                | 3,505,254  |                                          |   | 10.87                                                                 |  | 8.51                                                                   |  
|2007                  |  | 3                         |  | 92,072                        |  |                                                | 855,644    |                                          |   | 9.29                                                                  |  | 2.43                                                                   |  
|2008                  |  | 5                         |  | 346,169                       |  |                                                | 2,855,359  |                                          |   | 8.25                                                                  |  | 9.14                                                                   |  
|2009                  |  | 3                         |  | 348,643                       |  |                                                | 2,416,644  |                                          |   | 6.93                                                                  |  | 9.20                                                                   |  
|2010                  |  | 5                         |  | 238,079                       |  |                                                | 2,065,139  |                                          |   | 8.67                                                                  |  | 6.29                                                                   |  
|After 2010            |  | 7                         |  | 449,865                       |  |                                                | 4,004,306  |                                          |   | 8.90                                                                  |  | 11.88                                                                  |  
|                      |  |                           |  |                               |  |                                                |            |                                          |   |                                                                       |  |                                                                        |  
|                      |  | 69                        |  | 3,787,590                     |  | $                                              | 30,593,155 |                                          | $ | 8.08                                                                  |  | 100.00                                                                 | %
|
|2001                  |  | 181                       |  | 518,280                       |  | $                                              | 12,312,736 |                                          | $ | 23.76                                                                 |  | 21.78                                                                  | %
|2002                  |  | 122                       |  | 355,438                       |  |                                                | 8,664,778  |                                          |   | 24.38                                                                 |  | 14.94                                                                  |  
|2003                  |  | 117                       |  | 379,985                       |  |                                                | 9,521,853  |                                          |   | 25.06                                                                 |  | 15.97                                                                  |  
|2004                  |  | 76                        |  | 252,981                       |  |                                                | 5,885,138  |                                          |   | 23.26                                                                 |  | 10.63                                                                  |  
|2005                  |  | 110                       |  | 437,540                       |  |                                                | 11,059,306 |                                          |   | 25.28                                                                 |  | 18.39                                                                  |  
|2006                  |  | 36                        |  | 132,300                       |  |                                                | 3,119,647  |                                          |   | 23.58                                                                 |  | 5.56                                                                   |  
|2007                  |  | 26                        |  | 47,836                        |  |                                                | 1,935,454  |                                          |   | 40.46                                                                 |  | 2.01                                                                   |  
|2008                  |  | 16                        |  | 57,462                        |  |                                                | 1,441,428  |                                          |   | 25.08                                                                 |  | 2.42                                                                   |  
|2009                  |  | 18                        |  | 66,402                        |  |                                                | 1,751,328  |                                          |   | 26.37                                                                 |  | 2.79                                                                   |  
|2010                  |  | 36                        |  | 83,894                        |  |                                                | 2,594,615  |                                          |   | 30.93                                                                 |  | 3.53                                                                   |  
|After 2010            |  | 14                        |  | 46,985                        |  |                                                | 1,223,143  |                                          |   | 26.03                                                                 |  | 1.98                                                                   |  
|                      |  |                           |  |                               |  |                                                |            |                                          |   |                                                                       |  |                                                                        |  
|                      |  | 752                       |  | 2,379,103                     |  | $                                              | 59,509,426 |                                          | $ | 25.01                                                                 |  | 100.00                                                                 | %
|
|2001                  |  | 191                       |  | 1,101,098                     |  | $                                              | 16,350,600 |                                          | $ | 14.85                                                                 |  | 17.86                                                                  | %
|2002                  |  | 127                       |  | 523,224                       |  |                                                | 10,034,201 |                                          |   | 19.18                                                                 |  | 8.48                                                                   |  
|2003                  |  | 124                       |  | 791,035                       |  |                                                | 12,123,210 |                                          |   | 15.33                                                                 |  | 12.83                                                                  |  
|2004                  |  | 85                        |  | 674,084                       |  |                                                | 9,615,162  |                                          |   | 14.26                                                                 |  | 10.93                                                                  |  
|2005                  |  | 119                       |  | 845,126                       |  |                                                | 14,211,447 |                                          |   | 16.82                                                                 |  | 13.70                                                                  |  
|2006                  |  | 42                        |  | 454,719                       |  |                                                | 6,624,901  |                                          |   | 14.57                                                                 |  | 7.37                                                                   |  
|2007                  |  | 29                        |  | 139,908                       |  |                                                | 2,791,098  |                                          |   | 19.95                                                                 |  | 2.27                                                                   |  
|2008                  |  | 21                        |  | 403,631                       |  |                                                | 4,296,787  |                                          |   | 10.65                                                                 |  | 6.55                                                                   |  
|2009                  |  | 21                        |  | 415,045                       |  |                                                | 4,167,972  |                                          |   | 10.04                                                                 |  | 6.73                                                                   |  
|2010                  |  | 41                        |  | 321,973                       |  |                                                | 4,659,754  |                                          |   | 14.47                                                                 |  | 5.22                                                                   |  
|After 2010            |  | 21                        |  | 496,850                       |  |                                                | 5,227,449  |                                          |   | 10.52                                                                 |  | 8.06                                                                   |  
|                      |  |                           |  |                               |  |                                                |            |                                          |   |                                                                       |  |                                                                        |  
|                      |  | 821                       |  | 6,166,693                     |  | $                                              | 90,102,581 |                                          | $ | 14.61                                                                 |  | 100.00                                                                 | %

---

30

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LEASE EXPIRATION SCHEDULE (1)

The following table shows lease expirations assuming that none of the tenants exercise renewal options. Except as described in footnote (1), the minimum rent
is the monthly contractual minimum rent of the expiring leases as of December 31, 2000, multiplied by 12.

Unconsolidated Joint Ventures

|Lease
Expiration
Year |  | Number
of Leases
Expiring |  | Leased
Area in
Square Footage |  | Annualized Minimum
Rents
Under
Expiring Leases |             | Annualized Minimum
Rents
per
Square Foot |   | Percent of
Total Leased
Square
Footage
Represented by
Expiring Leases |  | Percent of
Total Minimum
Rents Represented
by Expiring
Expiring Leases |  
|--------------------- |  | ------------------------- |  | ----------------------------- |  | ---------------------------------------------- | ----------- | ---------------------------------------- | - | --------------------------------------------------------------------- |  | ---------------------------------------------------------------------- | -
|
|2001                  |  | 1                         |  | 30,639                        |  | $                                              | 474,905     |                                          | $ | 15.50                                                                 |  | 0.60                                                                   | %
|2002                  |  | 1                         |  | 23,329                        |  |                                                | 279,948     |                                          |   | 12.00                                                                 |  | 0.45                                                                   |  
|2003                  |  | 2                         |  | 44,258                        |  |                                                | 531,096     |                                          |   | 12.00                                                                 |  | 0.86                                                                   |  
|2004                  |  | 3                         |  | 72,842                        |  |                                                | 896,068     |                                          |   | 12.30                                                                 |  | 1.42                                                                   |  
|2005                  |  |                          |  |                              |  |                                                |            |                                          |   |                                                                      |  |                                                                       |  
|2006                  |  | 5                         |  | 125,082                       |  |                                                | 1,529,808   |                                          |   | 12.23                                                                 |  | 2.43                                                                   |  
|2007                  |  | 13                        |  | 341,847                       |  |                                                | 5,489,596   |                                          |   | 16.06                                                                 |  | 6.65                                                                   |  
|2008                  |  | 8                         |  | 235,089                       |  |                                                | 3,471,398   |                                          |   | 14.77                                                                 |  | 4.57                                                                   |  
|2009                  |  | 24                        |  | 745,230                       |  |                                                | 10,513,125  |                                          |   | 14.11                                                                 |  | 14.49                                                                  |  
|2010                  |  | 28                        |  | 905,398                       |  |                                                | 12,015,767  |                                          |   | 13.27                                                                 |  | 17.60                                                                  |  
|After 2010            |  | 40                        |  | 2,619,979                     |  |                                                | 30,206,925  |                                          |   | 11.53                                                                 |  | 50.94                                                                  |  
|                      |  |                           |  |                               |  |                                                |             |                                          |   |                                                                       |  |                                                                        |  
|                      |  | 125                       |  | 5,143,693                     |  | $                                              | 65,408,636  |                                          | $ | 12.72                                                                 |  | 100.00                                                                 | %
|
|2001                  |  | 81                        |  | 291,089                       |  | $                                              | 6,038,657   |                                          | $ | 20.75                                                                 |  | 7.76                                                                   | %
|2002                  |  | 138                       |  | 422,803                       |  |                                                | 9,799,974   |                                          |   | 23.18                                                                 |  | 11.28                                                                  |  
|2003                  |  | 99                        |  | 317,895                       |  |                                                | 7,972,885   |                                          |   | 25.08                                                                 |  | 8.48                                                                   |  
|2004                  |  | 137                       |  | 516,066                       |  |                                                | 11,582,453  |                                          |   | 22.44                                                                 |  | 13.76                                                                  |  
|2005                  |  | 136                       |  | 474,259                       |  |                                                | 11,766,565  |                                          |   | 24.81                                                                 |  | 12.65                                                                  |  
|2006                  |  | 68                        |  | 230,475                       |  |                                                | 5,771,018   |                                          |   | 25.04                                                                 |  | 6.15                                                                   |  
|2007                  |  | 88                        |  | 265,467                       |  |                                                | 6,862,739   |                                          |   | 25.85                                                                 |  | 7.08                                                                   |  
|2008                  |  | 61                        |  | 180,849                       |  |                                                | 5,682,200   |                                          |   | 31.42                                                                 |  | 4.82                                                                   |  
|2009                  |  | 87                        |  | 294,858                       |  |                                                | 8,233,362   |                                          |   | 27.92                                                                 |  | 7.86                                                                   |  
|2010                  |  | 133                       |  | 499,475                       |  |                                                | 14,199,457  |                                          |   | 28.43                                                                 |  | 13.32                                                                  |  
|After 2010            |  | 45                        |  | 256,076                       |  |                                                | 7,767,949   |                                          |   | 30.33                                                                 |  | 6.84                                                                   |  
|                      |  |                           |  |                               |  |                                                |             |                                          |   |                                                                       |  |                                                                        |  
|                      |  | 1,073                     |  | 3,749,312                     |  | $                                              | 95,677,259  |                                          | $ | 25.52                                                                 |  | 100.00                                                                 | %
|
|2001                  |  | 82                        |  | 321,728                       |  | $                                              | 6,513,562   |                                          | $ | 20.25                                                                 |  | 3.62                                                                   | %
|2002                  |  | 139                       |  | 446,132                       |  |                                                | 10,079,922  |                                          |   | 22.59                                                                 |  | 5.02                                                                   |  
|2003                  |  | 101                       |  | 362,153                       |  |                                                | 8,503,981   |                                          |   | 23.48                                                                 |  | 4.07                                                                   |  
|2004                  |  | 140                       |  | 588,908                       |  |                                                | 12,478,521  |                                          |   | 21.19                                                                 |  | 6.62                                                                   |  
|2005                  |  | 136                       |  | 474,259                       |  |                                                | 11,766,565  |                                          |   | 24.81                                                                 |  | 5.33                                                                   |  
|2006                  |  | 73                        |  | 355,557                       |  |                                                | 7,300,826   |                                          |   | 20.53                                                                 |  | 4.00                                                                   |  
|2007                  |  | 101                       |  | 607,314                       |  |                                                | 12,352,335  |                                          |   | 20.34                                                                 |  | 6.83                                                                   |  
|2008                  |  | 69                        |  | 415,938                       |  |                                                | 9,153,598   |                                          |   | 22.01                                                                 |  | 4.68                                                                   |  
|2009                  |  | 111                       |  | 1,040,088                     |  |                                                | 18,746,487  |                                          |   | 18.02                                                                 |  | 11.70                                                                  |  
|2010                  |  | 161                       |  | 1,404,873                     |  |                                                | 26,215,224  |                                          |   | 18.66                                                                 |  | 15.80                                                                  |  
|After 2010            |  | 85                        |  | 2,876,055                     |  |                                                | 37,974,874  |                                          |   | 13.20                                                                 |  | 32.33                                                                  |  
|                      |  |                           |  |                               |  |                                                |             |                                          |   |                                                                       |  |                                                                        |  
|                      |  | 1,198                     |  | 8,893,005                     |  | $                                              | 161,085,895 |                                          | $ | 18.11                                                                 |  | 100.00                                                                 | %

---

31

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AVERAGE RENTS

The following table sets forth, for each of the last five years, certain information regarding operating trends with respect to the existing Mills and The
Block at Orange.

|         |  |    |   | Minimum Rent Plus Percentage Rent
|-------- |  | -- | - | ---------------------------------
|
|
|
|2000     |  | 95 | % | $                                
|1999 (2) |  | 96 |   |                                  
|1998 (2) |  | 96 |   |                                  
|1997 (2) |  | 94 |   |                                  
|1996     |  | 94 |   |                                  

---

Note:  The
above amounts do not include Mainstreet retail income of $4,308,000 for 2000, $2,659,000 for 1999, $2,511,000 for 1998, $2,251,000 for 1997 and $2,088,000
for 1996.

32

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RENTAL RATES (1)

The following table sets forth the average base rent per leased square foot of store openings and closings for each property for the twelve months ended
December 31, 2000, 1999, 1998, 1997 and 1996.

Anchor StoresStore Openings
During Year

Store Closings
During Year

Releasing
Spread (2)Year

Average Base
Rent Per
Sq. Ft.

Total
Per
Sq. Ft.

Average Base
Rent Per
Sq. Ft.

Total
Per
Sq. Ft.2000

$
14.24

313,287

$
10.16

177,003

$
4.08

40.16
%1999


10.39

297,754


9.05

112,302


1.34

14.811998


11.94

234,059


8.48

224,636


3.46

40.801997


7.33

393,342


7.32

233,471


0.01

0.141996


18.54

91,653


12.95

74,453


5.59

43.17


Specialty StoresStore Openings
During Year

Store Closings
During Year

Releasing
Spread (2)Year

Average Base
Rent Per
Sq. Ft.

Total
Per
Sq. Ft.

Average Base
Rent Per
Sq. Ft.

Total
Per
Sq. Ft.2000

$
29.07

423,771

$
25.16

391,141

$
3.91

15.54
%1999


26.09

318,864


24.50

454,633


1.59

6.491998


23.43

405,408


21.80

339,988


1.63

7.481997


22.83

415,593


20.92

402,105


1.91

9.131996


22.76

290,825


19.97

311,250


2.79

13.97


---

33

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SPECIALTY STORE TENANT REPORTED SALES ANALYSIS

Gross Sales (PSF)Twelve Months
Ended
December 31,

Current Year

Prior Year

Percentage
Change2000

$
352

$
337

4.45
%1999

$
337

$
332

1.51
%1998

$
342

$
340

0.59
%


Comparable Sales (in thousands)Twelve Months
Ended
December 31,

Current Year

Prior Year

Percentage
Change2000

$
1,070,290

$
1,063,065

0.68
%1999

$
991,116

$
986,197

0.50
%1998

$
726,319

$
745,091

-2.52
%


---

Notes:For the analysis above, the Company only includes those projects which the Company views as achieving stabilized performance levels. The projects included in the respective years are as follows:

2000

Potomac Mills, Franklin Mills, Sawgrass Mills, Gurnee Mills, Ontario Mills, Grapevine Mills, Arizona Mills, The Block at Orange and The Oasis at Sawgrass1999

Potomac Mills, Franklin Mills, Sawgrass Mills, Gurnee Mills and Ontario Mills1998

Potomac Mills, Franklin Mills, Sawgrass Mills, Gurnee Mills and Ontario Mills


Comparable
sales presented above are based on tenant reported sales for the twelve months ended December 31, 2000 versus the twelve months ended December 31, 1999 and
include only those tenants that have been in occupancy for the 24 month period ended December 31, 2000. Concord Mills and Katy
Mills which opened September 1999 and October 1999, respectively, are excluded from this analysis, since these projects have not reached stabilized performance levels.

Diversified Tenant Base

Because our projects represent a collection of various retail formats under one roof, we believe that our tenant base represents one of the more diversified
mixes of retailers in the industry today. This is evidenced by the fact that no tenant represents more than 4.0% of 2000 base rent. We further believe that the overall credit of our tenant base is
strong given the diversity of our retailers and the large number of manufacturer outlet tenants. Our universe of tenants continues to expand.

The
following table, which includes our joint venture projects (Ontario Mills, Grapevine Mills, Arizona Mills, The Block at Orange, The Oasis at Sawgrass, Concord Mills, Katy Mills,
Opry Mills and

34

---

Arundel Mills), sets forth certain information with respect to our ten largest tenants (measured by 2000 base rent) as of December 31, 2000:

Tenant

Percent Of
2000
Base Rent

Percent Of
Total Leased
Gross Leasable Area

Number
Of
StoresAMC Theatres

4.0
%
3.3
%
6T.J. Maxx Group (1)

2.0

3.9

15J.C. Penney (2)

1.7

4.3

7GAP (3)

1.6

2.4

28Burlington Coat Factory Group (4)

1.6

5.8

11Rainforest Cafe

1.6

1.0

8Jillian's

1.6

1.7

5Bed, Bath & Beyond

1.4

2.3

9Off 5th  Saks Fifth Avenue

1.2

2.3

12Bass Pro Shops Outdoor World

1.2

4.3

5Total

17.9
%
31.3
%
106


---

Description of Existing Properties

Set forth below are descriptions of each of our existing Mills and Block properties.

Potomac Mills-Woodbridge, Virginia.Potomac Mills contains approximately 1.6 million square feet of gross
leasable area, of which one anchor store tenant owns approximately 80,000 square feet. Potomac Mills opened in 1985 with a total of approximately 630,000 square feet of gross leasable area. As a
result of customer demand, Potomac Mills was expanded to approximately 1.2 million square feet of gross leasable area in 1986. The Phase III expansion of Potomac Mills opened on
September 30, 1993 and increased total gross leasable area by approximately 355,000 square feet. We completed construction of a 63,000 square foot Van's Skate Park which opened in the spring of
2000. Potomac Mills has 19 anchors, including: IKEA, J.C. Penney Outlet, Homeplace, Marshalls, Spiegel Outlet, AMC Theatres, The Sports Authority, Off 5thSaks Fifth Avenue, T.J. Maxx,
Syms, Group USA and Nordstrom Rack. Potomac Mills is situated on approximately 161 acres located approximately 20 miles southwest of Washington, D.C. Potomac Mills is adjacent to Interstate 95, which
serves as one of the transportation backbones of the Washington metropolitan area. This location strategically positions Potomac Mills between the Washington/Baltimore metropolitan market to the north
and Richmond, approximately 90 miles to the south. We own 100% of Potomac Mills.

Franklin Mills-Philadelphia, Pennsylvania.Franklin Mills opened in 1989 and contains approximately 1.7 million
square feet of gross leasable area, of which two anchor store tenants own approximately 209,000 square feet. We began remerchandising Franklin Mills in 1996 by upgrading its tenant mix and began
construction on an entertainment zone, including themed restaurants and interactive entertainment venues, in the first half of 1997, which was completed in November 1998. Franklin Mills
has 19 anchors, including: Bed, Bath & Beyond, Last Call from Neiman Marcus, Marshalls, Nordstrom Rack, Office Max, Off 5th-Saks Fifth Avenue, Jillian's, Syms and Sam Ash Music.
Franklin Mills features what we believe is the largest concentration of outlet retailing in the

35

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Delaware Valley. With access from U.S. Highway 1 and the Pennsylvania Turnpike, Franklin Mills is strategically positioned approximately 15 miles northeast of Philadelphia's Center City and just west
of Interstate 95, a major thoroughfare serving the greater Philadelphia/Wilmington metropolitan market. We own 100% of Franklin Mills.

Sawgrass Mills-Sunrise, Florida.Sawgrass Mills, which opened in 1990, contains approximately 1.8 million square
feet of gross leasable area, of which three anchor store tenants own approximately 282,000 square feet. As a result of customer demand, Sawgrass Mills was expanded by approximately 136,000 square feet
of gross leasable area in 1995. We opened The Oasis at Sawgrass in April 1999 which consisted of an approximately 290,000 square foot entertainment zone anchored by a 24-screen
Regal Theater. Other tenants include Sega Gameworks, Cheesecake Factory and Legal Seafoods. Sawgrass Mills has 19 anchors, including: Beall's Outlet Store, Burlington Coat Factory, Last Call from
Neiman Marcus, Spiegel Outlet, The Sports Authority, Homeplace, GAP and Sun & Ski Sports. Sawgrass Mills is located in Florida's "Gold Coast" market approximately 11 miles west of Fort
Lauderdale. The site lies adjacent to both the Sawgrass Expressway and Flamingo Road, between Sunrise and Oakland Park Boulevards. The entire South Florida region is linked by the road network of the
Sawgrass Expressway, Interstate 75 and Interstate 595, which intersect at an interchange located less than two miles southwest of Sawgrass Mills. We own 100% of Sawgrass Mills, excluding The Oasis at
Sawgrass.

Gurnee Mills-Gurnee, Illinois.Gurnee Mills opened in 1991 and contains approximately 1.7 million square feet of
gross leasable area, of which three anchor store tenants own approximately 251,000 square feet. We completed construction of an expansion of over 195,000 square feet of gross leasable area in 1999,
which added an ice skating rink to the existing mall. Gurnee Mills has been remerchandised resulting in the upgrade of the project's tenant mix. Gurnee Mills has 16 anchors, including: Bass Pro Shops
Outdoor World, Rinkside Sports, J.C. Penney Outlet, Homeplace, Marshalls, Spiegel Outlet, Bed, Bath & Beyond, The Sports Authority, Off 5th-Saks Fifth Avenue, T.J. Maxx and Syms.
The project is located adjacent to Interstate 94, the major north/south thoroughfare linking Chicago and Milwaukee. Gurnee Mills is clearly visible from Interstate 94 and is situated directly across
from Six Flags Great America, one of the largest amusement parks in the Midwest. We own 100% of Gurnee Mills.

Ontario Mills-Ontario, California.Ontario Mills opened in 1996 and contains approximately 1.5 million square
feet of gross leasable area comprised of approximately 1,000,000 square feet of anchor space and approximately 500,000 square feet of specialty store space. In 1999, we completed a 136,000 square foot
expansion which included tenants such as Van's Skate Park, Sam Ash Music, Cost Plus and Iguana Ameramex. Ontario Mills currently has 23 anchors, including: Off 5th-Saks Fifth Avenue, Cost
Plus, Dave & Busters, Hollytron, Iguana Ameramex, J.C. Penney Outlet, Burlington Coat Factory, The Sports Authority, Marshalls, Bed, Bath & Beyond, Mikasa, Off Rodeo Drive, T.J. Maxx,
AMC Theatres, Virgin
Megastore, Group USA, Foozles, Totally 4 Kids, Rainforest Cafe, Sam Ash Music, Sega Gameworks and Van's Skate Park. Ontario Mills is located at the intersection of Interstate 10 and Interstate 15 in
the heart of the Riverside/San Bernardino area known as the "Inland Empire." Ontario Mills serves the Los Angeles/Orange County metropolitan market.

Ontario
Mills is owned by a limited partnership among us, with a 50% interest, Kan Am, with a 25% interest, and Simon Property, with a 25% interest. Kan Am contributed 50% of the
initial required equity capital. We and Simon Property have contributed the balance of the initial required equity capital on a pro rata basis. We, Simon Property and Kan Am each receive a 9%
preferred return on our equity, and the remaining cash flow is distributed pro rata in accordance with the percentage ownership interests. We have the right to manage the development, property
management and leasing of the Ontario Mills project, subject to the other joint venture partners' approval of specified major decisions, including sale or refinancing of the project and approval of an
annual budget.

36

---



At
specified times following the fifth anniversary of the project's opening, either we and Simon Property together or Kan Am can exercise a buy-sell provision. Pursuant to
the buy-sell provision, we and Simon Property can require Kan Am to sell to us, for cash or limited partnership units of the Operating Partnership and limited partnership units of Simon
Property at Kan Am's election, Kan Am's entire interest in the partnership. Also pursuant to the buy-sell provision, Kan Am can require us and Simon Property to acquire, for cash or
limited partnership units of the Operation Partnership and limited partnership units of Simon Property at our and Simon Property's election, Kan Am's entire interest in the partnership.

At
any time, during the operating period, if we or Simon are unable to agree on specified major decisions, at any time following the fifth or tenth anniversary of the project's
completion date or at any time if certain named executive officers of either us or Simon are no longer executive officers, either we or Simon can exercise a buy-sell provision. Pursuant to
the buy-sell provision, either party, as the offeror, may require the other party, as offeree, to elect to either sell to the offeror the offeree's interest in the limited liability
company or purchase from the offeror the offeror's interest in the limited liability company for cash, subject to compliance with certain procedural requirements.

Grapevine MillsGrapevine, Texas.Grapevine Mills opened in 1997 and contains approximately
1.5 million square feet of gross leasable area comprised of approximately 950,000 square feet of anchor space and approximately 520,000 square feet of specialty store space. Grapevine Mills
currently has 20 anchors, including: AMC Theatres, Polar Ice, Old Navy, Bass Pro Shops Outdoor World, Off 5th-Saks Fifth Avenue, Burlington Coat Factory, Bed, Bath & Beyond, Group
USA, Books-A-Million, Sega Gameworks, Virgin Megastore, Iguana Ameramex and Sun & Ski Sports. Grapevine Mills is located on a 175-acre site located at the
interchange of Highway 121 and International Parkway, two miles north of the Dallas/Fort Worth Airport in Grapevine, Texas. Grapevine Mills is approximately 19 miles northeast of downtown Fort Worth
and serves the Dallas/Fort Worth metropolitan area.

Grapevine
Mills is owned by a limited partnership among us, with a 37.5% interest, Simon Property, with a 37.5% interest, and Kan Am, with a 25% interest. Kan Am contributed 50% of
the initial required equity capital. We and Simon Property have contributed the balance of the initial required equity capital on a pro rata basis. We, Simon Property and Kan Am each receive a 9%
preferred return on our equity, and the remaining cash flow is distributed pro rata in accordance with the percentage ownership interests. We and Simon Property have the right to manage the
development, property management and leasing of the Grapevine Mills project, specified major decisions subject to Simon Property's and Kan Am's approval, which include changes to the plan of
development, the annual operating budget for the project and any proposed sale or refinancing.

At
specified times following the tenth anniversary of the project's opening, either we and Simon Property together or Kan Am can exercise a buy-sell provision. Pursuant to
the buy-sell provision, we
and Simon Property can require Kan Am to sell to us, for cash or limited partnership units of the Operating Partnership and limited partnership units of Simon Property at Kan Am's election, Kan Am's
entire interest in the partnership. Also pursuant to the buy-sell provision, Kan Am can require us and Simon Property to acquire, for cash or limited partnership units of the Operating
Partnership and limited partnership units of Simon Property at our and Simon Property's election, Kan Am's entire interest in the partnership.

At
any time, during the operating period, if we or Simon are unable to agree on specified major decisions, at any time following the tenth anniversary of the project's completion date
or at any time if certain named executive officers of either us or Simon are no longer executive officers, either we or Simon can exercise a buy-sell provision. Pursuant to the
buy-sell provision, either party, as the offeror, may require the other party, as offeree, to elect to either sell to the offeror the offeree's interest in the limited liability company or
purchase from the offeror the offeror's interest in the limited liability company for cash, subject to compliance with certain procedural requirements.

37

---

Arizona MillsTempe, Arizona.Arizona Mills opened in 1997 and contains approximately 1.2 million
square feet of gross leasable area comprised of approximately 710,000 square feet of anchor space and approximately 520,000 square feet of specialty store space. Arizona Mills currently has 16
anchors, including: Burlington Coat Factory, Off 5th-Saks Fifth Avenue, Last Call-Neiman Marcus, Oshman's, Harkins Cinema, Hilo Hattie, J.C. Penney, Group USA,
Hi-Health, Virgin Megastore and Sega Gameworks. The project is located on a 115-acre site located 20 minutes from downtown Phoenix, at the intersection of Interstate 10 and
Superstition Freeway (Highway 60).

Arizona
Mills is owned by a limited liability company owned by us, with a 36.8% interest, Taubman Realty, with a 36.8% interest, and Simon Property, with a 26.4% interest. All joint
venture partners are obligated to contribute required equity capital on a pro rata basis. We have the right to manage the development, property management and leasing services of the Arizona Mills
project, subject to the other joint venture partners' approval of specified major decisions, including sale or refinancing of the project and approval of an annual budget.

At
specified times following the later of the fifth anniversary of the project's opening or the date that 90% of the project has been leased, if the joint venture partners are unable
to agree upon specified major decisions (including, among others, sales, refinancings, expansions, and certain capital expenditures), any joint venture partner can cause the project to be sold
pursuant to specified procedures.

The Block at OrangeOrange, California.The Block at Orange opened in November 1998, with
approximately 642,000 square feet of gross leasable area comprised of approximately 360,000 square feet of anchor space and approximately 280,000 square feet of specialty store space. The Block at
Orange currently has 10 anchors, including: Borders Books and Music, Van's Skate Park, Virgin Megastore, Off 5th-Saks Fifth Avenue, Ron Jon Surf Shop, Sega Gameworks, AMC Theatres,
Dave & Busters, Hilo Hattie, Mars Music, and has an additional anchor store commitment. The Block at Orange is located on an 85-acre site located at the intersection of the Santa
Ana Freeway (I-10), the Garden Grove Freeway and Orange Freeway (Highway 57) in the City of Orange, California, three miles from Disneyland.

The
Block at Orange project is owned by a limited partnership between us, with a 50% interest, and Kan Am, with a 50% interest. Kan Am has contributed $60 million (which
represents 100% of the estimated equity requirements for this project). Kan Am receives a 9% preferred return on its equity and the remaining cash flow will be distributed pro rata in accordance with
the percentage ownership interests. We have guaranteed Kan Am's receipt of this preferred return until such time as qualified permanent financing is secured for the project. We have the right to
provide all the development, property management and leasing services for the project, subject to the approval of Kan Am for specified major decisions, including the sale or refinancing of the project
and approval of an annual budget.

At
specified times following the tenth anniversary of the project's opening, either we or Kan Am can exercise a buy-sell provision. Pursuant to the buy-sell
provision, we can require Kan Am to sell to us, for cash or limited partnership units of the Operating Partnership at Kan Am's election, Kan Am's entire interest in the partnership. Also pursuant to
the buy-sell provision, Kan Am can require us to acquire, for cash or limited partnership units of the Operating Partnership at our election, Kan Am's entire interest in the partnership.

The Oasis at SawgrassSunrise, Florida.The Oasis at Sawgrass opened in 1999 and contains approximately
290,000 square feet of gross leasable area comprised of approximately 135,000 square feet of anchor space and approximately 155,000 square feet. The Oasis at Sawgrass currently has 3 anchors: Regal
Theatre, Sega Gameworks, and Ron Jon Surf Shop. The Oasis at Sawgrass is an expansion of the existing Sawgrass Mills Project.

38

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The Oasis at Sawgrass is owned by a limited partnership among us, with a 50% interest, and Kan Am, with a 50% interest. The land on which the Oasis is situated is owned in fee by
Sawgrass Mills Phase II Limited Partnership and is ground leased to the joint venture that owns the Oasis. The Oasis joint venture, in turn, master leases improvements containing 96,907 square feet of
space to the entity that owns Phase I of Sawgrass Mills. A transaction was completed by which Sawgrass Mills Phase II Limited Partnership conveyed its fee title interest in the Phase III land to the
Oasis joint venture and terminated the Phase III ground lease.

Kan
Am has contributed $24 million (which represents 100% of the estimated equity requirements for this project.) Kan Am receives a 9% preferred return on it's equity and the
remaining cash flow will be distributed pro rata in accordance with the percentage ownership interests. We have guaranteed Kan Am's receipt of this preferred return until such time as qualified
permanent financing is secured for this project. We have the right to provide all the development, property management and leasing services for this project, subject to the approval of Kan Am for
specified major decisions, including the sale or refinancing of the project and approval of an annual budget.

At
specified times following the tenth anniversary of the project's opening, either we or Kan Am can exercise a buy-sell provision. Pursuant to the buy-sell
provision, we can require Kan Am to sell us, for cash or limited partnership units of the Operating Partnership at Kan Am's election, Kan Am's entire interest in the partnership. Also, pursuant to the
buy-sell provision, Kan Am can require us to acquire, for cash or limited partnership units of the Operating Partnership at our election, Kan Am's entire interest in the partnership.

Concord MillsConcord, North Carolina.Concord Mills opened in 1999 and contains approximately
1.3 million square feet of gross leasable area comprised of approximately 690,000 square feet of anchor space and approximately 570,000 square feet of specialty store space. Concord Mills
currently has 16 anchors including: Bass Pro Shops Outdoor World, AMC theatres, Jillian's, Sun & Ski Sports, Alabama Grill, Off 5th-Saks Fifth Avenue, Burlington Coat Factory, T.J.
Maxx, F.Y.E. (For Your Entertainment), and Old Navy. Concord Mills is located on an 165-acre site at the intersection of interstate 85 and Concord Mills Boulevard in the city of concord
which is approximately ten miles north of downtown Charlotte.

Concord
Mills is owned by a limited partnership among us, with a 37.5% interest, Simon Property, with a 37.5% interest, and Kan Am, with a 25% interest. Kan Am has contributed
$25.0 million (which represents 50% of the estimated equity requirements for the project). We and Simon Property have contributed the balance of this initial required equity capital on a pro
rata basis. We, Simon Property, and Kan Am receive a 9% preferred return on our equity and the remaining cash flow is distributed pro rata in accordance with the percentage ownership interests. We and
Simon Property have guaranteed Kan Am's receipt of this preferred return until qualified permanent financing is secured for the project. We and Simon Property have the right to manage the development,
property management and leasing of the project. Specified major decisions are subject to Simon Property's and Kan Am's approval, which includes changes to the plan of development, the annual operating
budget and any proposed sale or refinancing.

At
specified times following the tenth anniversary of the project's opening, either we and Simon Property together or Kan Am can exercise a buy-sell provision. Pursuant to
the buy-sell provision, we and Simon Property can require Kan Am to sell us, for cash or limited partnership units of the Operating Partnership and limited partnership units of Simon
Property, at Kan Am's election, Kan Am's entire interest in the partnership. Also, pursuant to the buy-sell provision, Kan Am can require us and Simon Property to acquire, for cash or
limited partnership units of the Operating Partnership and limited partnership units of Simon Property at our and Simon Property's election, Kan Am's entire interest in the partnership.

39

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At any time, during the operating period, if we or Simon are unable to agree on specified major decisions, at any time following the tenth anniversary of the project's completion date
or at any time if certain named executive officers of either us or Simon are no longer executive officers, either we or Simon can exercise a buy-sell provision. Pursuant to the
buy-sell provision, either party, as the offeror, may require the other party, as offeree, to elect to either sell to the offeror the offeree's interest in the limited liability company or
purchase from the offeror the offeror's interest in the limited liability company for cash, subject to compliance with certain procedural requirements.

Katy MillsKaty, Texas.Katy Mills opened in 1999 and contains approximately 1.2 million square feet
of gross leasable area comprised of approximately 630,000 square feet of anchor space and approximately 560,000 square feet of specialty store space. Katy Mills currently has 13 anchors including:
Bass Pro Shops Outdoor World, Burlington Coat Factory, AMC Theatres, F.Y.E. (For Your Entertainment), Off 5th-Saks Fifth Avenue, Sun & Ski Sports, Old Navy, Jillian's, and
Marshalls. Katy Mills is located on a 500-acre site at the intersection of Interstate 10 and Katy-Fort Bend Road in Fort Bend and Harris Counties which is approximately twenty
miles west of Houston.

Katy
Mills is owned by a limited partnership between us, with a 62.5% interest, and Kan Am, with a 37.5% interest. Kan Am has contributed $78.75 million (which represents 75%
of the estimated equity requirements for the project). We and Kan Am receive a 9% preferred return on our equity and the remaining cash flow will be distributed pro rata in accordance with the
percentage ownership interests. We have guaranteed Kan Am's receipt of this preferred return until qualified permanent financing is secured for the project. We have the right to provide all
development, property management and leasing services for the project, subject to the approval of Kan Am for specified major decisions, including a sale or refinancing of the project and approval of
annual budgets.

At
specified times following the tenth anniversary of the project's opening, either we or Kan Am can exercise a buy-sell provision. Pursuant to the buy-sell
provision, we can require Kan Am to sell us, for cash or limited partnership units of the Operating Partnership, at Kan Am's election, Kan Am's entire interest in the partnership. Also, pursuant to
the buy-sell provision, Kan Am can require us to acquire, for cash or limited partnership units of the Operating Partnership at our election, Kan Am's entire interest in the partnership.

Opry MillsNashville, Tennessee.Opry Mills opened in May 2000 and contains approximately
1.1 million square feet of gross leasable area comprised of approximately 575,000 square feet of anchor space and approximately 535,000 square feet of specialty store space. Opry Mills
currently has 15 anchors including: Alabama Grill, Barnes & Noble, Bass Pro Shops Outdoor World, Gibson Guitar, Jillian's, Off Broadway Shoes, Off 5th-Saks Fifth Avenue, Old Navy, Regal
Theatre, Sun & Ski Sports and Tower Records. Opry Mills is located on a 67-acre site that is adjacent to the Grand Ole Opry and the Opryland Hotel Convention Center.

The
project is owned by a limited partnership between us, with a 66.67% interest, and a corporate affiliate of Gaylord Entertainment Company ("Gaylord"), with a 33.33% interest.
Gaylord has agreed to contribute the land for the project, valued at $25 million, as their initial required capital. We have contributed the balance of the initial required capital. We and
Gaylord receive a 9% preferred return on our equity, and the remaining cash flow is distributed pro rata in accordance with the percentage of ownership interests, except that until the project has
achieved an 11% yield, up to $3.5 million out of certain net sponsorship revenues will be distributed to us. We have the right to provide development, leasing and management services for the
project, subject to the approval of the general partners for specified major decisions, including a sale or refinancing of the project and approval of annual budgets.

At
specified times, following the tenth anniversary of the project's opening or at any time after the opening if the partners are unable to agree on specified major decisions, either
we or Gaylord can exercise a buy-sell provision. Pursuant to the buy-sell provision, either party, as the offeror, may require

40

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the other party, as the offeree, to elect to either sell to the offeror the offeree's interest in the partnership or purchase from the offeror the offeror's interest in the partnership for cash.

41

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Arundel MillsAnne Arundel County, Maryland.Arundel Mills opened in November 2000 and contains
approximately 1.0 million square feet of gross leasable area comprised of approximately 460,000 square feet of anchor gross leasable area and approximately 540,000 square feet of specialty
store space. Arundel Mills currently has 11 anchors, including: Bed, Bath & Beyond, Books-A-Million, Burlington Coat Factory, F.Y.E. (For Your Entertainment), Jillian's,
Muvico Theatres, Off 5th-Saks Fifth Avenue, Off Broadway Shoes, Old Navy, Sun & Ski Sports and T.J. Maxx. Arundel Mills has two additional anchor commitments, including Bass Pro Shops Outdoor
World, which will open in 2001. Arundel Mills is located on an approximately 107-acre site near the intersection of the Baltimore-Washington Parkway and State Route 100 in Anne Arundel
County, Maryland.

Arundel
Mills is owned by a limited partnership among us, with a 37.5% interest, Simon Property, with a 37.5% interest, and Kan Am with a 25% interest. Kan Am has contributed
$35.0 million (which represents 50% of the estimated equity requirements for the project). We and Simon Property have contributed the balance of this initial required capital on a pro rata
basis. We, Simon Property and Kan Am receive a 9% preferred return on our equity, and the remaining cash flow is distributed pro rata in accordance with the percentage ownership interests. We and
Simon Property have guaranteed Kan Am's receipt of this preferred return until qualified permanent financing is secured for the project. We and Simon Property have the right to provide development,
management and leasing services for the project. Specified major decisions are subject to Simon Property's and Kan Am's approval, which
include changes to the plan of development, the annual operating budget and any proposed sale or refinancing.

At
specified times following the tenth anniversary of the project's opening, either we and Simon Property together or Kan Am can exercise a buy-sell provision. Pursuant to
the buy-sell provision, we and Simon Property can require Kan Am to sell us, for cash or limited partnership units of the Operating Partnership and limited partnership units of Simon
Property, at Kan Am's election, Kan Am's entire interest in the partnership. Also, pursuant to the buy-sell provision, Kan Am can require us and Simon Property to acquire, for cash or
limited partnership units of the Operating Partnership and limited partnership units of Simon Property at our and Simon Property's election, Kan Am's entire interest in the partnership. In addition,
as specified times following the occurrence of a Change of Control Transaction with respect to the Company, Kan Am can exercise the buy-sell provision and require us and Simon Property to
acquire for cash or limited partnership units of the Operating Partnership and limited partnership units of Simon Property at our and Simon's election, Kan Am's entire interest in the partnership.

At
any time, during the operating period, if we or Simon are unable to agree on specified major decisions, at any time following the tenth anniversary of the project's completion date
or at any time if certain named executive officers of either us or Simon are no longer executive officers, either we or Simon can exercise a buy-sell provision. Pursuant to the
buy-sell provision, either party, as the offeror, may require the other party, as offeree, to elect to either sell to the offeror the offeree's interest in the limited liability company or
purchase from the offeror the offeror's interest in the limited liability company for cash, subject to compliance with certain procedural requirements.

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CAPITAL EXPENDITURESEXISTING MILLS AND EXISTING COMMUNITY CENTERS COMBINED (9), (10), (11)

The
following tables set forth certain information regarding capital expenditures for the Mills and the Community Centers combined for each of the last three years and a
3-year average. Only 2000 data is available for The Block at Orange.

|                                                   |  | Years Ended December 31, |               |  
|-------------------------------------------------- |  | ------------------------ | ------------- | -
|
|
|RECURRING NON-TENANT CAPITAL EXPENDITURES (1)      |  |                          |               |  
|Costs                                              |  | $                        | 1,173,885     |  
|Per Square Foot(2)                                 |  |                          | 0.10          |  
|RECURRING TENANT IMPROVEMENTS/LEASING COSTS(3)     |  |                          |               |  
|Costs                                              |  | $                        | 3,617,617     |  
|Per Square Foot Improved(4)                        |  |                          | 7.60          |  
|Per Square Foot(2)                                 |  |                          | 0.37          |  
|TOTAL RECURRING COSTS                              |  |                          |               |  
|Costs                                              |  | $                        | 4,791,502     |  
|Per Square Foot(2)                                 |  |                          | 0.47          |  
|NON-RECURRING TENANT IMPROVEMENTS/LEASING COSTS(3) |  |                          |               |  
|Costs                                              |  | $                        | 27,614,724 (7 | )
|Per Square Foot Improved(5)                        |  |                          | 61.40         |  
|Per Square Foot(2)                                 |  |                          | 2.25          |  
|WORK IN PROCESS(6)                                 |  |                          |               |  
|Costs                                              |  | $                        | 1,989,851     |  
|Per Square Foot Improved(8)                        |  |                          | 13.92         |  

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43

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44

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CAPITAL EXPENDITURESEXISTING MILLS AND BLOCK(9),(10)

The following table sets forth certain information regarding capital expenditures for the existing Mills (Potomac Mills, Franklin Mills, Sawgrass Mills, Gurnee
Mills, Ontario Mills, Grapevine Mills, Arizona Mills and The Block at Orange) for each of the last three years and a 3-year average. Only 2000 data is available for The Block at Orange.

|                                                   |  | Years Ended December 31, |            |    
|-------------------------------------------------- |  | ------------------------ | ---------- | ---
|
|
|RECURRING NON-TENANT CAPITAL EXPENDITURES(1)       |  |                          |            |    
|Costs                                              |  | $                        | 1,025,745  |    
|Per Square Foot(2)                                 |  |                          | 0.11       |    
|RECURRING TENANT IMPROVEMENTS/LEASING COSTS(3)     |  |                          |            |    
|Costs                                              |  | $                        | 2,872,457  |    
|Per Square Foot Improved(4)                        |  |                          | 8.06       |    
|Per Square Foot(2)                                 |  |                          | 0.37       |    
|TOTAL RECURRING COSTS                              |  |                          |            |    
|Costs                                              |  | $                        | 3,898,202  |    
|Per Square Foot(2)                                 |  |                          | 0.48       |    
|NON-RECURRING TENANT IMPROVEMENTS/LEASING COSTS(3) |  |                          |            |    
|Costs                                              |  | $                        | 18,529,987 | (7)
|Per Square Foot Improved(5)                        |  |                          | 57.36      |    
|Per Square Foot(2)                                 |  |                          | 1.87       |    
|WORK IN PROCESS(6)                                 |  |                          |            |    
|Costs                                              |  | $                        | 1,989,851  |    
|Per Square Foot Improved(8)                        |  |                          | 13.92      |    

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CAPITAL EXPENDITURESCOMMUNITY CENTERS(8)

The following table sets forth certain information regarding capital expenditures for the Community Centers for each of the last three years and a
3-year average.

|                                                   |  | Years Ended December 31, |           | 
|-------------------------------------------------- |  | ------------------------ | --------- | 
|
|
|RECURRING NON-TENANT CAPITAL EXPENDITURES(1)       |  |                          |           | 
|Costs                                              |  | $                        | 148,140   | 
|Per Square Foot(2)                                 |  |                          | 0.07      | 
|RECURRING TENANT IMPROVEMENTS/LEASING COSTS(3)     |  |                          |           | 
|Costs                                              |  | $                        | 745,160   | 
|Per Square Foot Improved(4)                        |  |                          | 5.82      | 
|Per Square Foot(2)                                 |  |                          | 0.34      | 
|TOTAL RECURRING COSTS                              |  |                          |           | 
|Costs                                              |  | $                        | 893,300   | 
|Per Square Foot(2)                                 |  |                          | 0.41      | 
|NON-RECURRING TENANT IMPROVEMENTS/LEASING COSTS(3) |  |                          |           | 
|Costs                                              |  | $                        | 9,084,737 | 
|Per Square Foot Improved(5)                        |  |                          | 72.90     | 
|Per Square Foot(2)                                 |  |                          | 4.12      | 
|WORK IN PROCESS(6)                                 |  |                          |           | 
|Costs                                              |  | $                        |          | 
|Per Square Foot Improved(7)                        |  |                          |          | 

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SUMMARY OF OUTSTANDING CONSOLIDATED INDEBTEDNESS
(DOLLARS IN THOUSANDS)

As of December 31, 2000, the Company had outstanding consolidated indebtedness in an aggregate amount of approximately $966.5 million (excluding
its pro rata share of unconsolidated joint venture debt) as set forth below:

|Mortgage/Loan                    |               | Principal
Balance |         | Interest
Rate Type |          | Annual
Interest Rate |                   | Maturity
Date |          | Annual
Interest |     | Earliest Day
at Which Debt
Can be Repaid |        | Recourse to
Company or
Operating
Partnership |       
|-------------------------------- | ------------- | ----------------- | ------- | ------------------ | -------- | -------------------- | ----------------- | ------------- | -------- | --------------- | --- | ---------------------------------------- | ------ | -------------------------------------------- | ------
|Potomac Mills/Gurnee Mills:      |               |                   |         |                    |          |                      |                   |               |          |                 |     |                                          |        |                                              |       
|                                 | Tranche A     |                   | $       | 199,148            | (19)     | Fixed                |                   | 6.905%        |          | 12/17/26        | (1) | $                                        | 13,751 |                                              | (2)   
|                                 | Tranche B     |                   |         | 27,000             | (19)     | Fixed                |                   | 7.021%        |          | 12/17/26        | (1) |                                          | 1,896  |                                              | (2)   
|                                 | Tranche C     |                   |         | 15,000             | (19)     | Fixed                |                   | 7.235%        |          | 12/17/26        | (1) |                                          | 1,085  |                                              | (2)   
|                                 | Tranche D     |                   |         | 30,000             | (19)     | Fixed                |                   | 7.701%        |          | 12/17/26        | (1) |                                          | 2,310  |                                              | (2)   
|Franklin Mills and Liberty Plaza |               |                   |         |                    |          |                      |                   |               |          |                 |     |                                          |        |                                              |       
|                                 | Tranche A     |                   |         | 106,358            |          | Fixed                |                   | 7.882%        |          | 06/01/27        | (3) |                                          | 8,383  |                                              | (4)   
|                                 | Mortgage Loan |                   |         | 19,339             |          | Fixed                |                   | 7.440%        |          | 06/01/27        | (3) |                                          | 1,439  |                                              | (4)   
|                                 | Mortgage Loan |                   |         | 12,627             |          | Fixed                |                   | 6.220%        |          | 06/01/27        | (3) |                                          | 785    |                                              | (4)   
|Sawgrass Mills                   |               |                   | 185,000 |                    | Variable |                      | 275 bp over LIBOR |               | 06/18/01 |                 |     | 17,232                                   | (6)    | (5)                                          |       
|CVS Portfolio (25 stores)        |               |                   | 35,967  |                    | Fixed    |                      | 7.960%            |               | 10/10/10 |                 |     | 2,863                                    |        | (15)                                         |       
|CVS Portfolio (25 stores)        |               |                   | 28,330  |                    | Fixed    |                      | 9.350%            |               | 01/10/23 |                 |     | 2,649                                    |        | (16)                                         |       
|CVS Portfolio (21 stores)        |               |                   | 40,646  |                    | Fixed    |                      | 6.498%            |               | 08/06/18 |                 |     | 2,641                                    |        | (17)                                         |       
|Concord Mills Residual III:      |               |                   | 9,043   |                    | Variable |                      | 225 bp over LIBOR |               | 12/31/02 | (11)            |     | 797                                      | (6)    | (7)                                          |       
|                                 |               |                   |         |                    |          |                      |                   |               |          |                 |     |                                          |        |                                              |       
|Total Property Mortgages         |               |                   | 708,458 |                    |          |                      |                   |               |          |                 |     | 55,831                                   |        |                                              |       
|                                 |               |                   |         |                    |          |                      |                   |               |          |                 |     |                                          |        |                                              |       
|Sawgrass Mills Mezzanine Loan    |               |                   | 100,000 |                    | Variable |                      | 275 bp over LIBOR |               | 06/18/01 |                 |     | 9,312                                    | (6)    | (5)                                          |       
|Corporate Miscellaneous          |               |                   | 2,400   |                    | Fixed    |                      | 7.180%            |               | 07/15/01 |                 |     | 172                                      |        | (9)                                          |       
|Mainstreet Retail                |               |                   | 12,938  |                    | Variable |                      | 425 bp over LIBOR |               | 07/21/10 |                 |     | 1,399                                    |        | (14)                                         |       
|Foodbrand (Katy/Franklin/Opry)   |               |                   | 11,925  |                    | Fixed    |                      | 11.080%           |               | 07/15/05 |                 |     | 1,321                                    |        | (13)                                         |       
|Foodbrand (Arundel)              |               |                   | 1,913   |                    | Fixed    |                      | Treasury + 4.500% |               | 10/30/05 |                 |     | 181                                      | (18)   | (13)                                         |       
|Foodbrand (Arundel)              |               |                   | 1,000   |                    | Variable |                      | 12.000%           |               | 10/30/05 |                 |     | 120                                      |        | (13)                                         |       
|Corporate Term Loan              |               |                   | 50,000  |                    | Variable |                      | 225 bp over LIBOR |               | 06/01/03 |                 |     | 4,405                                    | (6)    | (7), (12)                                    |       
|Corporate Line of Credit         |               |                   | 75,000  |                    | Variable |                      | 275 bp over LIBOR | (8)           | 06/01/02 |                 |     | 6,983                                    | (6)    | (7)                                          |       
|Sawgrass Residual:               |               |                   | 2,871   |                    | Variable |                      | 165 bp over LIBOR |               | 01/18/01 |                 |     | 236                                      | (6)    | (10)                                         |       
|                                 |               |                   |         |                    |          |                      |                   |               |          |                 |     |                                          |        |                                              |       
|                                 |               |                   | Total   |                    | $        | 966,505              |                   |               |          |                 |     |                                          |        | $                                            | 79,960
|                                 |               |                   |         |                    |          |                      |                   |               |          |                 |     |                                          |        |                                              |       

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48

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49

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SUMMARY OF OUTSTANDING UNCONSOLIDATED JOINT VENTURE INDEBTEDNESS  (DOLLARS IN THOUSANDS)

As of December 31, 2000, the unconsolidated joint ventures had outstanding indebtedness in an aggregate amount of approximately $1.3 billion as
set forth below.

|Mortgage/Loan          |  | Principal
Balance |           | Total
Commitment |   | Interest
Rate Type |  | Annual
Interest Rate |          | Maturity
Date |                   | Annual
Interest |          | Earliest day
at which debt
can be
Repaid |   | Recourse to
Company or
Operating
Partnership |    
|---------------------- |  | ----------------- | --------- | ---------------- | - | ------------------ |  | -------------------- | -------- | ------------- | ----------------- | --------------- | -------- | ---------------------------------------- | - | -------------------------------------------- | ---
|Arizona Mills          |  | $                 | 145,762   |                  | $ | 146,000            |  |                      | Fixed    |               | 7.895%            |                 | 10/05/10 |                                          | $ | 11,508                                       |    
|Grapevine Mills        |  |                   | 155,000   |                  |   | 155,000            |  |                      | Fixed    |               | 6.465%            |                 | 10/01/08 | (1)                                      |   | 10,021                                       |    
|Grapevine Mills II     |  |                   | 14,491    |                  |   | 14,500             |  |                      | Fixed    |               | 8.390%            |                 | 11/05/08 | (5)                                      |   | 1,216                                        |    
|Ontario Mills          |  |                   | 142,117   |                  |   | 145,000            |  |                      | Fixed    |               | 6.750%            |                 | 12/01/28 | (9)                                      |   | 9,593                                        |    
|Ontario Mills II       |  |                   | 10,500    |                  |   | 10,500             |  |                      | Fixed    |               | 8.010%            |                 | 01/05/09 |                                          |   | 841                                          |    
|The Block at Orange    |  |                   | 131,407   |                  |   | 136,000            |  |                      | Variable |               | 125 bp over LIBOR | (6)             | 01/22/02 |                                          |   | 10,265                                       | (4)
|Sawgrass Phase III     |  |                   | 44,000    |                  |   | 44,000             |  |                      | Variable |               | 110 bp over LIBOR | (7)             | 01/18/02 |                                          |   | 3,371                                        | (4)
|Sawgrass Phase III     |  |                   | 3,495     |                  |   | 6,500              |  |                      | Variable |               | 275 bp over LIBOR |                 | 01/18/02 |                                          |   | 325                                          | (4)
|Concord Mills          |  |                   | 179,883   |                  |   | 199,000            |  |                      | Variable |               | 110 bp over LIBOR | (13)            | 12/02/01 |                                          |   | 13,961                                       | (4)
|Katy Mills             |  |                   | 164,924   |                  |   | 168,000            |  |                      | Variable |               | 175 bp over LIBOR |                 | 03/31/02 |                                          |   | 13,707                                       | (4)
|Opry Mills             |  |                   | 170,284   |                  |   | 176,500            |  |                      | Fixed    | (17)          | 175 bp over LIBOR | (17)            | 10/01/02 |                                          |   | 14,578                                       | (4)
|Arundel Mills          |  |                   | 111,428   |                  |   | 191,000            |  |                      | Variable |               | 165 bp over LIBOR |                 | 05/30/03 |                                          |   | 9,150                                        | (4)
|Arundel Mills Residual |  |                   | 5,374     |                  |   | 10,000             |  |                      | Variable |               | 200 bp over LIBOR |                 | 12/08/01 |                                          |   | 460                                          | (4)
|Discover Mills         |  |                   | 25,000    |                  |   | 25,000             |  |                      | Variable |               | 300 bp over LIBOR |                 | 06/19/01 |                                          |   | 2,390                                        | (4)
|Total                  |  | $                 | 1,303,665 |                  | $ | 1,427,000          |  | $                    | 101,386  |               |                   |                 |          |                                          |   |                                              |    

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51

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52

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Income Producing PropertyFederal Income Tax Basis (in thousands)

The following table sets forth certain information regarding federal income tax basis and depreciation of income producing property for the Mills (including
Ontario Mills, Grapevine Mills, Arizona Mills, The Oasis at Sawgrass, Concord Mills, Katy Mills, Opry Mills and Arundel Mills, which are unconsolidated joint ventures) and The Block at Orange, which
is an unconsolidated joint venture, as of December 31, 2000:

|                      |  | Land |        | Land Improvements |   | Building |  | Furniture, Fixture
and Equipment
|--------------------- |  | ---- | ------ | ----------------- | - | -------- |  | --------------------------------
|
|Franklin Mills        |  | $    | 28,313 |                   | $ | 6,840    |  | MACRS 15                        
|Gurnee Mills          |  |      | 18,456 |                   |   | 16,931   |  | MACRS 15                        
|                      |  |      |        |                   |   |          |  | MACRS 15                        
|Potomac Mills         |  |      | 15,913 |                   |   | 27,199   |  | ACRS  15,18                     
|Sawgrass Mills        |  |      | 12,992 |                   |   | 9,094    |  | MACRS 15                        
|Ontario Mills         |  |      | 8,384  |                   |   | 11,627   |  | MACRS 15                        
|Grapevine Mills       |  |      | 23,166 |                   |   | 6,269    |  | MACRS 15                        
|Arizona Mills         |  |      | 23,877 |                   |   | 539      |  | MACRS 15                        
|The Block at Orange   |  |      | 23,205 |                   |   | 10,221   |  | MACRS 15                        
|The Oasis at Sawgrass |  |      |       |                   |   | 3,917    |  | MACRS 15                        
|Concord Mills         |  |      | 24,828 |                   |   | 21,021   |  | MACRS 15                        
|Katy Mills            |  |      | 8,989  |                   |   | 20,311   |  | MACRS 15                        
|Opry Mills            |  |      | 10,669 |                   |   | 16,276   |  | MACRS 15                        
|Arundel Mills         |  |      | 16,668 |                   |   | 23,280   |  | MACRS 15                        

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

53

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PART II

Item 5. Market for the Registrant's Common Stock and related Shareholder Matters

Market Information

Our common stock trades on the New York Stock Exchange ("NYSE") under the symbol "MLS". The following table sets forth the high and low closing sale prices per
share of common stock for the periods indicated as reported on the NYSE and the distributions per share paid by us with respect to the periods noted.

HIGH

LOW

DISTRIBUTIONS2000First Quarter

$
18
5/8
$
15
5/8
$
.5025Second Quarter


19
1/16

17
7/16

.5175Third Quarter


18
15/16

17
1/16

.5175Fourth Quarter


18
3/4

16
1/16

.51751999First Quarter

$
20
7/16
$
17
5/16
$
.4875Second Quarter


22
3/8

16
3/16

.5025Third Quarter


21
11/16

17
3/4

.5025Fourth Quarter


18
1/4

15
3/8

.5025


The
last reported closing sale price on the NYSE on August 9, 2001 was $24.70 per share. As of August 9, 2001, there were 24,236,009 shares of our common stock
outstanding, held by 1,007 holders of record (including 319,239 shares issued to the Operating Partnership and held in escrow to secure specific obligations pursuant to a settlement agreement with
Chelsea GCA Realty and Simon Property.

Distributions

We have made consecutive quarterly distributions since our initial public offering. The indicated annual distribution rate was $2.07 per share of common stock
based on the fourth quarter 2000 distribution. A portion of our distribution may represent a non-taxable return of capital and/or a capital gain dividend. Approximately 75% of 2000
distributions of $2.05 per share of common stock were a non-taxable return of capital. Approximately 25% of 2000 distributions were ordinary dividends. In 2001, we increased our annual
distribution rate to $2.13 per share of common stock commencing with our dividend for the first quarter of 2001 which is payable in April 2001. Our ability to make distributions depends on a
number of factors, including net cash provided by operating activities, financial condition, capital commitments, debt repayment schedules and such other factors, as the Board of Directors deems
relevant.

Holders
of common stock are entitled to receive distributions when, as and if declared by the Board of Directors out of any funds legally available for that purpose. As a REIT, we are
required to distribute annually to our shareholders at least 95% of its "real estate investment trust taxable income," which, as defined by the relevant tax statutes and regulations, is generally
equivalent to net taxable ordinary income.

Item 6. Selected Financial Data

The following table sets forth selected consolidated financial data for the Company, the Operating Partnership and their subsidiaries. The historical financial
data should be read in conjunction with the financial statements and notes thereto included and the discussion set forth in "Management's Discussion and Analysis of Financial Condition and Results of
Operations," each included elsewhere in this Form 10-K/A.

54

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THE MILLS CORPORATION  SELECTED CONSOLIDATED FINANCIAL DATA  (In thousands, except per share data)

|                |                                                                                       | Years Ended December 31,                                 |        
|--------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------- | -------
|
|OPERATING DATA: |                                                                                       |                                                          |        
|                | REVENUES:                                                                             |                                                          |        
|                |                                                                                       | Minimum rent                                             |        
|                |                                                                                       | Percentage rent                                          |        
|                |                                                                                       | Recoveries from tenants                                  |        
|                |                                                                                       | Other property revenue                                   |        
|                |                                                                                       | Management fee income                                    |        
|                |                                                                                       | Other fee income                                         |        
|                |                                                                                       | Interest income                                          |        
|                |                                                                                       |                                                          |        
|                |                                                                                       |                                                          | 190,711
|                |                                                                                       |                                                          |        
|                | EXPENSES:                                                                             |                                                          |        
|                |                                                                                       | Recoverable from tenants                                 |        
|                |                                                                                       | Other operating                                          |        
|                |                                                                                       | General and administrative                               |        
|                |                                                                                       | Interest expense                                         |        
|                |                                                                                       | Depreciation and amortization                            |        
|                |                                                                                       |                                                          |        
|                |                                                                                       |                                                          | 160,187
|                |                                                                                       |                                                          |        
|                | Other income (expense)                                                                |                                                          |        
|                | Gain on sale of community centers                                                     |                                                          |        
|                | Equity in earnings of unconsolidated joint ventures before extraordinary items        |                                                          |        
|                |                                                                                       | Income before extraordinary items and minority interests |        
|                | Extraordinary loss on debt extinguishments                                            |                                                          |        
|                | Equity in extraordinary loss on debt extinguishments of unconsolidated joint ventures |                                                          |        
|                |                                                                                       |                                                          |        
|                |                                                                                       | Income before minority interests                         |        
|                | Minority interests                                                                    |                                                          |        
|                |                                                                                       |                                                          |        
|                |                                                                                       | Net income                                               |        
|                |                                                                                       |                                                          |        
|                | EARNINGS PER COMMON SHARE  BASIC:                                                    |                                                          |        
|                |                                                                                       | Income before extraordinary items                        |        
|                |                                                                                       | Extraordinary losses on debt extinguishments             |        
|                |                                                                                       |                                                          |        
|                |                                                                                       | Net income                                               |        
|                |                                                                                       |                                                          |        
|                | EARNINGS PER COMMON SHARE  DILUTED:                                                  |                                                          |        
|                |                                                                                       | Income before extraordinary items                        |        
|                |                                                                                       | Extraordinary losses on debt extinguishments             |        
|                |                                                                                       |                                                          |        
|                |                                                                                       | Net income                                               |        
|                |                                                                                       |                                                          |        

55

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THE MILLS CORPORATION  SELECTED CONSOLIDATED FINANCIAL DATA (Continued)  (In thousands, except per share data)

| |                                   | Years Ended December 31,                                           |  
| | --------------------------------- | ------------------------------------------------------------------ | -
|
| | PER SHARE INFORMATION             |                                                                    |  
| |                                   | Dividends declared per common share (unaudited):                   |  
| |                                   | Ordinary income                                                    |  
| |                                   | Capital gains                                                      |  
| |                                   | Return of capital                                                  |  
| |                                   |                                                                    |  
| |                                   | Dividends per common share                                         |  
| |                                   |                                                                    |  
| | OTHER DATA:                       |                                                                    |  
| | Cash flows provided by (used in): |                                                                    |  
| |                                   | Operating activities                                               |  
| |                                   | Investing activities                                               |  
| |                                   | Financing activities                                               |  
| | Funds from Operations (1)         |                                                                    | $
| | Distributions paid per share      |                                                                    | $
| |                                   | Weighted average shares outstanding                                |  
| | Diluted                           |                                                                    |  
| |                                   | Weighted average shares and Units Outstanding  Diluted            |  
| | PORTFOLIO DATA:                   |                                                                    |  
| |                                   | Total owned GLA at end of period                                   |  
| |                                   | Number of properties at end of period                              |  
| | BALANCE SHEET DATA:               |                                                                    |  
| |                                   | Investment in real estate assets (before accumulated depreciation) |  
| |                                   | Total assets                                                       |  
| |                                   | Total mortgages, notes and loans payable                           |  
| |                                   | Minority interests                                                 |  
| |                                   | Total stockholders' equity                                         |  

---

56

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

THE MILLS CORPORATION

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated
Financial Statements and Notes thereto for the years ended December 31, 2000, 1999 and 1998.

COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999

Income before extraordinary item and minority interest for the year ended December 31, 2000, increased by approximately $12.7 million (26.0%) to
$61.3 million as compared to the year ended December 31, 1999. The increase was the result of an increase in revenues of approximately $6.0 million (3.3%), a gain on the sale of
ten of the eleven Community Centers ("Disposed Properties"See Note 3 to the Financial Statements) of approximately $18.4 million, an increase in equity in earnings of
unconsolidated joint ventures before extraordinary items of approximately $4.3 million (34.9%), offset by an increase in expenses of $13.5 million (9.2%) and a decrease in other income
(expense) of $2.6 million (156.2%).

Revenues

Minimum rent for the year ended December 31, 2000, decreased approximately $0.9 million (0.8%) compared with the year ended December 31,
1999. The decrease was primarily due to the loss of $6.4 million of minimum rent associated with the Disposed Properties. This was partially offset by $2.5 million of rental income from
the portfolio of single tenant net lease properties that were acquired near the beginning of the fourth quarter of 2000 ("Acquired Properties"see Note 4 to the Financial
Statements), $1.5 million increase in kiosk rents due to program expansion, higher rents throughout the portfolio and the opening of four new anchor tenants at Franklin Mills, Sawgrass Mills
and Liberty Plaza.

Recoveries
from tenants for the year ended December 31, 2000, increased approximately $0.3 million (0.6%) compared with the year ended December 31, 1999. The
increase was primarily due to increased expenses at various properties partially offset by the loss of $2.1 million of recoveries from tenants associated with the Disposed Properties.

Other
property revenue, which includes rent from temporary tenants, sponsorship income, termination income and income from the Company's pushcart program, for the year ended
December 31, 2000, increased $1.5 million (17.5%) compared with the year ended December 31, 1999. The increase was due to current year recovery of accounts receivable that were
reserved in prior years, more aggressive termination policies for underperforming tenants and an increase in income related to the Company's pushcart program.

Management
fee income for the year ended December 31, 2000, increased $3.6 million (72.7%) compared with the year ended December 31, 1999. The increase was
primarily due to the opening of The Oasis at Sawgrass in the second quarter of 1999, the opening of Concord Mills in the third quarter of 1999, the opening of Katy Mills in the fourth quarter of 1999,
the opening of Opry Mills in the second quarter of 2000 and the opening of Arundel Mills in the fourth quarter of 2000.

Interest
income for the year ended December 31, 2000, increased $2.3 million (86.9%) compared with the year ended December 31, 1999. The increase was primarily
due to the recognition of previously deferred interest income relating to advances that the Company has made to the Meadowlands joint ventures. This income was recognized in the third quarter as a
result of certain events that made the collectibility of interest probable, including certain actions taken by the U.S. Army Corps of Engineers with respect to the required fill permit for the
Meadowlands project.

57

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Expenses

Other operating expense of the year ended December 31, 2000 decreased $0.8 million (13.3%) compared with the year ended December 31, 1999.
The decrease is primarily due to $0.4 million of expenses associated with the Disposed Properties as well as decreased legal and promotional expenses across the portfolio.

General
and administrative expense for the year ended December 31, 2000, increased $3.3 million (26.4%) compared with the year ended December 31, 1999. The
increase was primarily due to the increase in costs associated with the Company's FoodBrand operations and expanded operations as a result of opening The Oasis at Sawgrass, Concord Mills, Katy Mills,
Opry Mills and Arundel Mills.

Interest
expense for the year ended December 31, 2000, increased $7.2 million (14.6%) compared with the year ended December 31, 1999. The increase was primarily
due to the additional debt related to Sawgrass Mills that was obtained in January 2000 (see Liquidity and Capital Resources discussion) and a higher average debt burden related to the line of
credit. The Company also had $2.0 million of interest expense related to the single tenant net lease properties which was partially offset by a $3.3 million reduction in interest expense
related to the Disposed Properties.

Depreciation
and amortization expense for the year ended December 31, 2000, increased $3.9 million (11.4%) compared with the year ended December 31, 1999. The
increase was due to $1.2 million increase in depreciation associated with the Company's FoodBrand operations, $0.9 million increase in equipment depreciation due to software conversions
and upgrades, $0.6 million in amortization of leasing costs associated with wholly-owned property expansion and remerchandising as well as additional amortization of unconsolidated joint
venture investment basis adjustments associated with the openings of Concord Mills, Katy Mills, Opry Mills and Arundel Mills.

Other
income (expense) for the year ended December 31, 2000, decreased by $2.6 million (156.2%) compared with the year ended December 31, 1999. The decrease was
primarily due to an increase of $4.6 million in costs of abandoned projects and $0.6 million decrease in gains from wholly-owned land sales. This was partially offset by a
$2.7 million increase in operating margins associated with the Company's FoodBrand operations and other retail operating operations.

Equity
in earnings of unconsolidated joint ventures before extraordinary items, for the year ended December 31, 2000, increased $4.3 million (34.9%) compared with the
year ended December 31, 1999. The increase is due to a $3.1 million increase in the Company's share of joint venture land sale gains, as well as an increase in operating income across
all joint venture properties and an increase in lease buyout fees at various joint venture centers. This is offset by a decrease of $1.1 million in interest income received during 1999 related
to the tax increment financing on the Katy Mills joint venture. The agreement provides for the joint venture to receive interest on costs incurred prior to receipt of the financing.

Extraordinary
losses on debt extinguishments for the year ended December 31, 2000 increased $0.4 million (13.9%) compared with the year ended December 31, 1999.
In 1999, the Company incurred $2.7 million in extraordinary loss on the debt extinguishment related to the refinancing of the Community Centers versus $3.1 million in extraordinary loss
on the debt extinguishment related to the refinancing of Sawgrass Mills in 2000 (see Liquidity and Capital Resources discussion).

Equity
in extraordinary losses on debt extinguishments of unconsolidated joint ventures for the year ended December 31, 2000 was $0.3 million which represents the
Company's share of the $0.9 million extraordinary loss on debt extinguishments related to the refinancing of Arizona Mills (See Liquidity and Capital Resources discussion).

58

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COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998

Income before minority interest for the year ended December 31, 1999, increased by approximately $6.6 million (16.8%), to $45.8 million as
compared to the year ended December 31, 1998. The increase was the result of an increase in revenues of approximately $7.4 million (4.2%), an increase in equity in earnings of
unconsolidated joint ventures before extraordinary items of approximately $4.2 million (51.7%), offset by an increase in expenses of approximately $5.3 million (3.8%) and a decrease in
other income (expense) of approximately $0.8 million (106.4%).

Revenues

Minimum rent for the year ended December 31, 1999, increased approximately $2.9 million (2.9%) compared with the year ended December 31,
1998. The increase was primarily due to additional rents obtained in connection with the Company's expansion and remerchandising efforts at Franklin Mills and Gurnee Mills as well as higher lease
rates across the properties.

Recoveries
from tenants for the year ended December 31, 1999, increased $0.7 million (1.4%) compared to the year ended December 31, 1998. The increase was due to
increases in recoverable operating costs for various projects, an increase in the recoveries from Franklin Mills due to increasing the management-imposed ceiling on operating cost
pass-throughs, and improved recapture of operating costs in the new leases executed by the Company.

Other
property revenue for the year ended December 31, 1999, increased $1.1 million (14.7%) compared to the year ended December 31, 1998. The increase was
primarily due to an increase in income related to the Company's pushcart program and increases in lease buyout income at various properties in the portfolio.

Management
fee income for the year ended December 31, 1999, increased $2.7 million (123.0%) to $4.9 million compared to the year ended December 31, 1998.
The increase was due to the opening of The Block at Orange in the fourth quarter 1998, the opening of The Oasis at Sawgrass in the second quarter of 1999, the opening of Concord Mills in the third
quarter of 1999 and the opening of Katy Mills in the fourth quarter of 1999.

Other
fee income for the year ended December 31, 1999, increased $0.7 million (9.3%) compared with the year ended December 31, 1998. The increase was due to
development, leasing and finance fees
earned from seven projects in 1999 (Ontario Mills, Grapevine Mills, The Block at Orange, Katy Mills, Concord Mills, Opry Mills and The Oasis at Sawgrass) versus six projects in 1998 (Ontario Mills,
Grapevine Mills, The Block at Orange, The Oasis at Sawgrass, Katy Mills and Concord Mills).

Interest
income for the year ended December 31, 1999, decreased $0.6 million (19.5%) compared with the year ended December 31, 1998. The decrease was due to
interest received in 1998 as part of a payment for a legal settlement.

Expenses

Other operating expenses for the year ended December 31, 1999, increased $0.3 million (5.3%) compared with the year ended December 31,
1998. The increase was primarily due to an increase in operating costs associated with the Company's pushcart program.

General
and administrative expenses for the year ended December 31, 1999, increased $2.4 million (24.2%) compared with the year ended December 31, 1998. The
increase was primarily due to the increase in costs associated with FoodBrand (the Company's food and beverage entity that was created in 1999 to master lease and operate food courts at the Company's
malls with existing operations at Katy Mills and Franklin Mills, and future projects under development) and other retail operations as

59

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well as expanded operations (i.e. the opening of The Block at Orange, The Oasis at Sawgrass, Concord Mills and Katy Mills).

Interest
expense for the year ended December 31, 1999, increased $3.1 million (6.8%) compared with the year ended December 31, 1998. The increase was primarily
due to the additional debt related to the ten community centers refinancing in 1999 and the additional debt related to Sawgrass Mills that was obtained in June 1999 (see Liquidity and Capital
Resources discussion).

Other
income (expense) for the year ended December 31, 1999, decreased $0.8 million (106.4%) compared with the year ended December 31, 1998. The decrease was
primarily due to $1.1 million of start-up costs and $0.8 million of operating losses associated with the introduction of the Company's FoodBrand and other retail operations
and an increase in abandoned project costs of $0.9 million, offset by $1.9 million in land sale gains.

Equity
in earnings of unconsolidated joint ventures before extraordinary items for the year ended December 31, 1999, increased $4.2 million (51.7%) compared with the
year ended December 31, 1998. The increase was due to an increase in the Company's share of gains on joint venture land sales of $0.9 million and income earned at The Block at Orange,
The Oasis at Sawgrass, Concord Mills and Katy Mills which commenced operations in the fourth quarter of 1998, second quarter of 1999, third quarter of 1999 and fourth quarter of 1999, respectively.
Also, the Company received $2.7 million of interest income related to tax increment financing on the Katy Mills joint venture. The agreement provides for the joint venture to receive interest
on costs incurred prior to receipt of the financing. These increases were partially offset by losses earned from investments held by Mills Enterprises, Inc, a wholly-owned subsidiary of the Company,
in partnerships that own certain retail operations.

Extraordinary
losses on debt extinguishments for the year ended December 31, 1999, increased $2.3 million compared with the year ended December 31, 1998. The
increase was due to a prepayment penalty of $2.4 million that was paid in connection with the refinancing of the community centers in the first quarter of 1999 plus the write-off of
the related unamortized loan costs. The 1998 extraordinary losses on debt extinguishments related to the write-offs of unamortized loan costs associated the Sawgrass Mills Phase II
refinancing and the refinancing of the Company's line of credit.

There
were no extraordinary losses on debt extinguishments of unconsolidated joint ventures in 1999. In 1998, the Company's share of the write-offs of unamortized loan
costs related to the refinancing of Grapevine Mills and Ontario Mills and the Company's share of a prepayment penalty that was incurred with the refinancing of Ontario Mills was $3.5 million.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2000, the Company's balance of cash and cash equivalents was $10.4 million, not including its proportionate share of cash held
by unconsolidated joint ventures.

In
June 2000, the Company refinanced and increased its line of credit from $100 million to $125 million. The new line of credit is comprised of two components.
The first component is a $50 million term loan which is secured by the Company's equity interest in Franklin Mills. The loan has two mandatory principal repayments of $5 million due on
or before June 1, 2001, and $10 million due on or before June 1, 2002. The loan matures in June 2003. The interest rate is payable at a variable rate with a variable
margin, which was LIBOR plus 2.25% at December 31, 2000. The second component is a $75 million unsecured revolving loan, all of which was drawn upon at December 31, 2000, and
which was used to fund acquisitions, redevelopment activities and as a revolving working capital facility. The loan matures in June 2002. The interest rate is payable at a variable rate with a
variable margin, which was LIBOR plus 2.75% at December 31, 2000.

60

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Pursuant to the line of credit, the Company is subject to certain performance measurements and restrictive covenants. The Company was in compliance with the applicable covenants at
December 31, 2000.

In
February 2001, the Company refinanced Potomac Mills and Gurnee Mills with a new non-recourse mortgage loan agreement of $355 million. The loan has an
interest rate of 7.46% and is a 30-year amortizing loan with a balloon payment anticipated in March 2011. The proceeds were used to repay a prior loan totaling approximately
$271 million and the remaining proceeds were used to pay down the line of credit and to fund the Company's development equity requirements. As of February 23, 2001, the outstanding
balance on the line of credit was $40 million.

FINANCING ACTIVITIES

The weighted average remaining life of the Company's indebtedness was 4 years with an 8.12% weighted average interest rate at December 31, 2000
for the Company's indebtedness and its share of funded construction and operating debt of the unconsolidated joint ventures.

As
a result of the refinancing of Potomac Mills and Gurnee Mills in February 2001, the Company's weighted average remaining life of its indebtedness would have been
5.4 years and its weighted average interest rate would have been 8.16% (including the Company's share of funded construction and operating debt of the unconsolidated joint ventures) at
December 31, 2000.

In
January 2000, the Company entered into a non-recourse mortgage loan agreement in the amount of $285 million secured by its equity interest in Sawgrass
Mills. The proceeds were used to repay prior loans totaling $235 million and the remaining proceeds were used to pay down the line of credit and to fund the Company's development equity
requirements. The new loan is a non-amortizing loan with a repayment date of June 18, 2001. The interest rate is payable at a variable rate, which is LIBOR plus 2.75%. The Company
is in the process of refinancing this loan and expects to have a new loan in place by June 2001.

In
May 2000, the Arundel Mills joint venture entered into a loan agreement in the amount of $191 million, of which approximately $111 million was outstanding at
December 31, 2000. The loan commitment matures in May 2003. The interest rate is LIBOR plus 1.65%. The loan is guaranteed severally by the Company and its joint venture partner, Simon
Property Group, L.P.

In
October 2000, the Arizona Mills joint venture entered into a mortgage loan agreement in the amount of $146 million. The proceeds were used to repay a prior
construction loan totaling approximately $142 million and the remaining proceeds were used to fund the joint venture's capital requirements. The
principal and interest of the loan is based on a 30-year amortization with a balloon repayment in October 2010. The interest rate is payable at a fixed rate of 7.895%.

In
August 2000, the Company sold ten of its eleven community centers ("Disposed Properties") to an unrelated third party for an aggregate sales price of $142 million.
The Company netted approximately $22.5 million in proceeds and the buyer assumed $111 million of existing debt. During the third and fourth quarters of 2000, the Company invested
approximately $8.8 million of the proceeds into a low risk portfolio of single tenant, A-rated credit net leases ("Acquired Properties") and the remaining proceeds were used to fund
the Company's development equity requirements. The aggregate purchase price of the Acquired Properties was $114 million. The Acquired Properties are all subject to single tenant net leases
operating as CVS. The leases are triple net leases that contain indemnification of liabilities customarily associated with possession of the site (including, without limitation, certain environmental
liabilities). The tenants' obligation under the leases are guaranteed by CVS Corporation, a Delaware Corporation.

The
Company assumed $105.2 million in debt associated with the Acquired Properties. The debt for the Acquired Properties is comprised of three components. The first
indebtedness of approximately

61

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$36 million with an interest rate of 7.96% is a non-amortizing loan with an anticipated balloon repayment in October 2010. The second indebtedness of approximately
$28.3 million with an interest rate of 9.35% is a non-amortizing loan with an anticipated balloon repayment in January 2023. The third indebtedness of approximately
$40.9 million is comprised of twenty-one notes with interest rates ranging from 6.35% to 6.77%. All twenty-one notes are amortizing loans that mature on dates ranging
from June 2018 to December 2019. All three components of the debt associated with the Acquired Properties are fully assignable.

In
February 1999, the Company received from Kan Am a commitment that Kan Am would use its best efforts to raise capital to invest in joint ventures with the Company over a
five-year period. Pursuant to this commitment, in exchange for interests in the applicable partnerships, Kan Am: contributed $25 million to Concord Mills Limited Partnership;
contributed $35 million to Arundel Mills Limited Partnership; and agreed to contribute $70 million to Sugarloaf Mills Limited Partnership.

The
Company and Kan Am are negotiating a modification to the February 1999 arrangement by which Kan Am would guarantee funding of $50 million in each of 2001 and 2002
for investment in qualifying development projects, and would agree to use its best efforts to contribute additional capital in such years for similar purposes. The Company expects that the terms of
the Company's future arrangements with Kan Am will be similar to Kan Am's historical capital contributions in the Company's projects. Kan Am and the Company will each receive a preferred return on
their qualifying equity. Historically, the rate of such preferred return has been 9%. The remaining cash flow will be split pro rata per the respective sharing percentages, which are determined on a
venture-by-venture basis. The Company and other joint venture partners will guarantee Kan Am's preference until such time as qualified permanent
financing is secured for the project. The Company (and, in certain cases, other joint venture partners on a specific project) guarantee Kan Am's portion of construction debt.

Kan
Am must raise capital from other investors to meet its funding commitments to the Company and there can be no assurance that Kan Am will be able to raise such additional capital
necessary to enable it to meet such best efforts funding commitments.

Effective
October 28, 1996, the Company filed a universal shelf registration statement on Form S-3 to offer a maximum of $250 million of common stock,
preferred stock and common stock warrants. A balance of approximately $128 million of common stock, preferred stock and common stock warrants remain available to the Company for issuance
pursuant to this shelf registration.

At
December 31, 2000, the Company had consolidated debt of approximately $966.5 million and the Company's pro-rata share of unconsolidated joint venture debt
was $509.2 million of which the Company guaranteed $269 million. Of this amount, $707.5 million was fixed rate debt and $768.2 million was variable rate debt. Scheduled
principal repayments of the Company's consolidated indebtedness and its pro rata share of gross unconsolidated joint venture debt through 2004 are approximately $1.1 billion with
$404.8 million due thereafter. The Company and its partners expect to refinance or repay these obligations with cash generated from operations, external borrowings (including refinancing of
existing loans) or equity issuances.

Pursuant
to the refinancing of Potomac Mills and Gurnee Mills mentioned previously, scheduled principal repayments of the Company's consolidated indebtedness and its pro rata share of
gross unconsolidated joint venture debt through 2004 would be approximately $800 million with $759.8 million due thereafter.

The
Company's EBITDA (earnings before interest, taxes, depreciation, amortization and extraordinary items) to interest expense coverage ratio (including the Company's proportionate
share of EBITDA and interest expense of unconsolidated joint ventures) for the 12 months ended December 31, 2000 and December 31, 1999 was 2.46 and 2.68, respectively. EBITDA to
interest expense coverage ratio is provided as a supplemental measurement of the Company's operating performance. EBITDA

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does not represent cash flows from operations as defined by GAAP and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as
a measure of liquidity. In addition, EBITDA measures presented by the Company may not be comparable to other similarly titled measures of other companies.

DEVELOPMENT, REMERCHANDISING AND EXPANSION

The Company is involved in the following development, remerchandising and expansion efforts:

The
Company's most significant development efforts currently are focused on the development of five projects: Discover Mills, Colorado Mills, Missouri Mills, Vaughan Mills and
Meadowlands Mills.

The
Company has formed a joint venture with Kan Am to develop Discover Mills on a 225-acre site located near Atlanta, Georgia. As of December 31, 2000, the Discover
Mills joint venture has acquired the land assemblage for the project, and has begun construction. The Company has accomplished significant preleasing for Discover Mills including nine anchor
commitments. Discover Mills is targeted to open in the fall of 2001. Kan Am will fund all of the required equity for this project and the remaining project costs are expected to be financed through a
construction loan which is expected to close at the beginning of the second quarter of 2001.

63

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The Company has identified a 130-acre site in Lakewood, Colorado, ten miles west of downtown Denver. On March 22, 2000, Colorado Retail Development, L.L.C. (an
affiliate of the Operating Partnership) and the Stevinson Partnership Ltd., the fee owner of the Colorado Mills site, entered into a Contribution Agreement that, among other things, provides
that upon the satisfactory completion of customary due diligence and feasibility studies, the parties will form a joint venture and the Stevinson Partnership, Ltd., will contribute the
site to the joint venture. It is anticipated that Colorado Retail Development, L.L.C. which will hold a 75% interest in the joint venture, will be fully obligated to fund all cash equity requirements
for the development of the shopping center and will receive a 9% cumulative preferred return on the first $42.7 million of its equity contributions and a 12% cumulative preferred return on any
additional equity contributions. The Stevinson Partnership, Ltd. which will hold a 25% interest, will receive capital account credit for the negotiated value of the land contributed, and will
receive a 9% cumulative preferred return. It is further anticipated that an additional joint venture partner would share or fund all of the equity requirements for the project in exchange for
ownership interests and preferred returns on its equity contributions. Colorado Mills is targeted to open in the fall of 2002.

The
Company has identified a 200-acre site in Hazelwood, Missouri, sixteen miles from downtown St. Louis. The Company is in the process of forming a joint venture to
develop the site. The 200-acre site is located at the northwest quadrant of State Highway 370 and Missouri Bottom Road in the city of Hazelwood, approximately sixteen miles from downtown
St. Louis. The Company anticipates construction could commence in 2001 and the project could open in 2002.

In
February 1998, the Company announced that it had secured a site in Vaughan, Ontario for the development of Vaughan Mills, the first Mills project to be developed outside of
the United States. The project will be developed jointly by an affiliate of the Operating Partnership and by Cambridge Shopping Centres II Limited as tenants in common. The Company anticipates that
the Operating Partnership's equity requirement for Vaughan Mills may exceed $30 million, of which the Company had funded approximately $22.2 million as of December 31, 2000, in
addition to capitalized interest and overhead. The Company has completed the land assemblage and is targeting a 2003 opening.

The
Company has acquired a mortgage interest in a 592-acre site located on the New Jersey Turnpike (I-95) adjacent to the Meadowlands Sports Complex and
approximately five miles from New York City. Commencement of construction is contingent upon the completion of ongoing Environmental Impact Statement and the federal/state permitting process. A
Special Area Management Plan (SAMP) for the Meadowlands area was published in the Federal Register on April 22, 1999. On July 20, 2000, the U. S. Army Corps of Engineers announced that
it had completed the Draft Environmental Impact Statement on Mills' Section 404 Fill Permit and the close of public comment occurred in October 2000. The U.S. Army Corps of Engineers is
currently completing the Final Environmental Impact Statement which precedes the Record of Decision for a federal wetlands fill permit. The mixed-use development consists of
2.0 million square feet of gross leasable area ("GLA") for Meadowlands Mills plus office and hotel space. The project would be developed on an entitled site of 90.5 acres plus roads and
retention
facilities. Upon procurement of all necessary entitlements, it is anticipated that the project will be developed by a joint venture to be formed among the Operating Partnership, Kan Am,
Empire Ltd. and Bennett S. Lazare. The Operating Partnership's equity requirements have not yet been determined. As of December 31, 2000, the Company had invested $43.2 million,
in addition to capitalized interest and overhead. Of the amount invested, $24.4 million is our equity contribution and the remaining balance is an advance to the joint venture.

On
March 20, 2001, Donald T. DiFrancesco, the Acting Governor of New Jersey, announced his support for the Company's efforts to develop a Mills project in the State of New
Jersey. He added, however, that he was concerned that the proposed Meadowlands Mills project could have significant negative impacts on the wetlands areas within the Meadowlands, and he noted other
environmental concerns. Due to these concerns, he asked the Company to withdraw its permit application for the

64

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existing site, but offered to work with the Company to find a suitable alternative site in Bergen County for the project. The Company believes that the proposed Meadowlands Mills project more than
sufficiently mitigates the environmental impacts that would result from its development. The Company believes that there is strong support for the development of Meadowlands Mills in Bergen County and
is continuing its efforts to secure the various permits and approvals required to commence construction at the existing location. However, the Company has accepted the Acting Governor's invitation to
jointly explore alternative nearby sites having acceptable visibility and access. These discussions are scheduled to begin in April of 2001.

In
addition to the above, the Company is also conducting due diligence on several other proposed sites for its Mills and Block projects, including sites in Cleveland, Ohio; Chicago,
Illinois; San Francisco, California; Boston, Massachusetts; and Tampa, Florida. The Company is also continuing to evaluate various prospective international sites, including a site identified in
Spain, with a concentrated focus on Western Europe as well as other domestic sites for other Mills-type projects and other retail-oriented projects.

The
Company is in the process of expanding and/or remerchandising Potomac Mills, Gurnee Mills, Grapevine Mills and Ontario Mills. The costs of these expansions and remerchandising
programs is estimated at $29 million. Of the estimated costs of $29 million, $9 million will be financed with external sources and $20 million will be funded by the
Operating Partnership. As of December 31, 2000, the Operating Partnership had funded approximately $8.8 million of the required equity to finance these programs.

Capital Resources

The Company anticipates that its operating expenses, interest expense on outstanding indebtedness, recurring capital expenditures and distributions to
stockholders in accordance with REIT requirements will be provided by cash generated from operations, potential ancillary land sales, future borrowings and possible sales of common and/or preferred
equity.

The
Company will need significant amounts of equity and debt capital to fund its development projects going forward. Access to capital is dependent upon many factors which are outside
of the Company's control. In recent years, capital costs have increased requiring the Company to re-examine its development and financing strategies. The Company believes that it will have
the capital and access to additional capital resources sufficient to expand and develop its business and complete those projects currently under development. In the event such capital cannot be
obtained, however, the Company's immediate and long-term development plans could be curtailed.

Distributions

The Company has paid and intends to continue to pay regular quarterly distributions to its stockholders. Distributions are payable at the discretion of the
Board of Directors and depend on a number of factors, including net cash provided by operating activities, its financial condition, capital commitments, debt repayment schedules and such other factors
as the Board of Directors deems relevant.

Cash Flows

Comparison of Year Ended December 31, 2000 to Year Ended December 31, 1999.Net cash provided by
operating activities increased approximately $1.3 million (1.7%) to $78.4 million for the year ended December 31, 2000, as compared to $77.1 million for the year ended
December 31, 1999. Net cash used in investing activities decreased approximately $17.8 million (18.5%) to $78.0 million for the year ended December 31, 2000, as compared to
$95.8 million for the year ended December 31, 1999, primarily as a result of an increase in distributions received from unconsolidated entities,

65

---

proceeds received from the sale of community centers and was partially offset by an increase in expenditures for real estate and development assets. Net cash provided by financing activities decreased
approximately $4.1 million (37.1%) to $7.1 million for the year ended December 31, 2000, as compared to $11.2 million for the year ended December 31, 1999. The
decrease was due to an increase in restricted cash and an increase in refinancing costs associated with the refinancing of Sawgrass Mills and the line of credit.

Comparison of Year Ended December 31, 1999 to Year Ended December 31, 1998.Net cash provided by
operating activities decreased by $1.8 million, or 2.3%, to $77.1 million for the year ended December 31, 1999, as compared to $78.9 million for the year ended
December 31, 1998, primarily as a result of increase in inventory related to the Company's retail operations. Net cash used in investing activities decreased $2.6 million (2.7%) to
$95.8 million for the year ended December 31, 1999, as compared to $98.4 million for the year ended December 31, 1998, primarily as a result of decreased expenditures for
real estate and development assets. Net cash provided by financing activities increased by $6.5 million, or 138.7%, to $11.2 million for the year ended December 31, 1999, as
compared $4.7 million for the year ended December 31, 1998, primarily as a result of the refinancing of ten community centers and the mezzanine loan related to Sawgrass Mills offset by
decreased debt repayments in 1999.

Funds from Operations

The Company considers Funds From Operations ("FFO") a widely used and appropriate measure of performance for an equity REIT which provides a relevant basis for
comparison among REITs. FFO as defined by National Association of Real Estate Investment Trusts ("NAREIT") means income (loss) before minority interest (determined in accordance with accounting
principles generally accepted in the United States ("GAAP"), excluding gains (losses) from debt restructuring and sales of depreciated property, plus real estate related depreciation and amortization
and after adjustments for unconsolidated partnerships and joint ventures. FFO is presented to assist investors in analyzing the performance of the Company. The Company's method of calculating FFO may
be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO (i) does not represent cash flows from operations as defined by GAAP,
(ii) is not indicative of cash available to fund all cash flow needs and liquidity, including its ability to make distributions and (iii) should not be considered as an alternative to
net income (determined in accordance with GAAP) for purposes of evaluating the Company's operating performance.

FFO
for the year ended December 31, 2000, increased to $105.3 million compared to $95.1 million for the comparable period in 1999. The following summary of the
Company's FFO and a reconciliation of net income before extraordinary items and minority interests to FFO is based on the NAREIT FFO definition for the periods presented:

Years Ended December 31,2000

1999

1998Funds from operations calculation:Income before extraordinary item and minority interests

$
61,255

$
48,603

$
43,192Adjustments:Add: Depreciation and amortization of real estate assets


35,028


32,333


32,694Add: Real estate depreciation and amortization of unconsolidated joint ventures


27,366


14,140


9,161Less: Gain on disposition of community centers


(18,370
)




Funds from operations

$
105,279

$
95,076

$
85,047


66

---

Seasonality

The regional shopping center industry is seasonal in nature, with mall tenant sales peaking in the fourth quarter due to the holiday season. As a result, a
substantial portion of the percentage rents are not paid until the fourth quarter. Furthermore, most new lease-up occurs towards the latter part of the year in anticipation of the holiday
season and most vacancies occur toward the beginning of the year. In addition, the majority of the temporary tenants take occupancy in the fourth quarter. Accordingly, cash flow and occupancy levels
are generally lowest in the first quarter and highest in the fourth quarter. This seasonality also impacts the quarter-by-quarter results of net operating income and FFO,
although this impact is largely mitigated by recognizing minimum rent on a straight-line basis over the term of related leases in accordance with GAAP.

Economic Trends

Because inflation has remained relatively low during the last three years, it has had little impact on the operation of the Company during that period. Even in
periods of higher inflation, however, tenant leases provide, in part, a mechanism to help protect the Company. As operating costs increase, leases permit a pass-through of the common area
maintenance and other operating costs, including real estate taxes and insurance, to the tenants. Furthermore, most of the leases contain base rent steps and percentage rent clauses that provide
additional rent after a certain minimum sales level is achieved. These provisions provide some protection to the Company during highly inflationary periods.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The estimated fair value of the Company's financial instruments has been determined by the Company, using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or estimation methodologies may have a material effect on the
estimated fair value amounts.

For
purposes of the Securities and Exchange Commission's market risk disclosure requirements, the Company has estimated the fair value of its financial instruments at
December 31, 2000. The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2000. Although management is not aware of any
factors that would significantly affect the estimated fair value amounts, as of December 31, 2000, future estimates of fair value and the amounts which may be paid or realized in the future may
differ significantly from amounts presented below. The following table provides information about our financial instruments that are sensitive to changes in interest rates as of December 31,
2000. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates.

67

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|                                                                  |  | 2001 |         | 2002 |   | 2003   |   | 2004 |         | 2005 |   | Thereafter |   | Total |        | Estimated
Fair Value
12/31/00
|----------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------ | - | ---- | ------- | ---- | - | ---------- | - | ----- | ------ | -----------------------------
|Mortgages, Notes and Loans Payable  fixed rate (in thousands)    |  | $    | 10,956  |      | $ | 9,275  |   | $    | 268,983 |      | $ | 6,426      |   | $     | 6,509  |                              
|Average rate                                                      |  |      | 7.84    | %    |   | 8.06   | % |      | 7.07    | %    |   | 8.95       | % |       | 9.10   | %                            
|Mortgages, Notes and Loans Payable  variable rate (in thousands) |  | $    | 291,664 |      | $ | 98,610 |   | $    | 36,732  |      | $ | 1,772      |   | $     | 1,799  |                              
|Average rate                                                      |  |      | L (1    | )    |   | L (1   | ) |      | L (1    | )    |   | L (1       | ) |       | L (1   | )                            
|                                                                  |  |      | + 2.75  | %    |   | + 2.64 | % |      | + 2.33  | %    |   | + 3.93     | % |       | + 3.92 | %                            

---

Pursuant to the requirements of its construction loan in the fourth quarter of 2000, the Opry Mills joint venture was required to enter into an
interest rate collar arrangement (Floor = 6.275% and cap = 7.000%) to reduce its exposure to fluctuating interest rates. The notional amount of this collar ($170,000) and its termination
date (September 2002) coincide with the terms of the construction loan. No payments were made as a result of this arrangement during the year ended December 31, 2000. The interest rate
collar described above has been designated a cash flow hedge of the interest rate risk in the variable rate construction loan. The Company's share of estimated fair value of the collar on
January 1, 2001 ($1,279) will be reflected as a transition adjustment in the first quarter of 2001 and reflected in other comprehensive income.

Item 8. Financial Statements and Supplementary Data

The Financial Statements and Schedule appearing on pages F-1 to F-24 are incorporated herein by reference in Item 14.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

68

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PART III

Item 10. Directors and Executive Officers of the Registrant

The directors and executive officers of the Company and their positions and offices as of February 28, 2000 are set forth in the following table:

Name

Age

Position and Offices HeldLaurence C. Siegel

48

Chairman of the Board, Chief Executive Officer and DirectorPeter B. McMillan

53

President, Chief Operating Officer and DirectorJames F. Dausch

58

Senior Executive Vice PresidentDevelopment and DirectorJudith S. Berson

58

Executive Vice PresidentLeasingKent S. Digby

48

Executive Vice PresidentManagement/MarketingKenneth R. Parent

40

Executive Vice President and Chief Financial OfficerThomas E. Frost

48

Executive Vice President, General Counsel and SecretarySteven J. Jacobsen

45

Executive Vice PresidentDevelopmentMark J. Rivers

35

Executive Vice PresidentChief Strategic OfficerJames P. Whitcome

54

Executive Vice PresidentCapital ServicesDietrich von Boetticher

59

Vice Chairman and DirectorJohn M. Ingram

65

Vice Chairman and DirectorCharles R. Black, Jr

53

DirectorJames C. Braithwaite

60

DirectorThe Hon. Joseph B. Gildnhorn

71

DirectorHarry H. Nick

59

DirectorFranz von Perfall

59

DirectorRobert P. Pincus

54

DirectorCristina L. Rose

54

Director


Biographical
summaries of the remaining directors and executive officers of the Company are included under the captions "Election of Directors (Proposal 1)Board of
Directors" and "Executive Officers of the Company," respectively, in our proxy statement for the 2001 Annual Meeting of Shareholders and are incorporated herein by reference. Information required by
Item 405 of Regulation S-K is included under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in our proxy statement for the 2001 Annual Meeting of
Shareholders and is incorporated herein by reference.

69

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Item 11. Executive Compensation

Information with respect to executive compensation is incorporated herein by reference to the information under the captions "Compensation of Directors" and
"Executive Compensation" in our proxy statement for the 2001 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information with respect to security ownership of certain beneficial owners and management of the Company is incorporated herein by reference to the
information under the caption "Voting Securities and Principal Holders Thereof" in our proxy statement for the 2001 Annual Meeting of Shareholders.

Item 13. Certain Transactions with Related Parties

Information with respect to certain relationships and transactions is incorporated herein by reference to the information under the caption "Certain
Relationships and Transactions" in our proxy statement for the 2001 Annual Meeting of Shareholders.

PART IV

Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K

14(a) LIST OF DOCUMENTS FILED AS PART OF FORM 10-K/A

|(1) |  | FINANCIAL STATEMENTS                                               |  | Page
|--- |  | ------------------------------------------------------------------ |  | ----
|    |  | Report of Independent Auditors                                     |  | F-1 
|    |  | Consolidated Balance Sheets                                        |  | F-2 
|    |  | Consolidated Statements of Income                                  |  | F-3 
|    |  | Consolidated Statements of Stockholders' Equity                    |  | F-4 
|    |  | Consolidated Statements of Cash Flow                               |  | F-5 
|    |  | Notes to Consolidated Financial Statements                         |  | F-6 
|(2) |  | FINANCIAL STATEMENTS SCHEDULES                                     |  | Page
|    |  | Schedule IIIConsolidated Real Estate and Accumulated Depreciation |  | F-22
|    |  | Notes to Schedule III                                              |  | F-23

All
other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are
included in the consolidated financial statements or are inapplicable and therefore have been omitted.

70

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(3) EXHIBITS

|Number |  | Exhibit                                                                                                                                                                                                                                                                                                               
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|+3.1   |  | Amended and Restated Certificate of Incorporation of the Company.                                                                                                                                                                                                                                                     
|#3.2   |  | Amended and Restated Bylaws of the Company                                                                                                                                                                                                                                                                            
|**3.3  |  | Limited Partnership Agreement of the Operating Partnership (filed as part of Exhibit 10.3)                                                                                                                                                                                                                            
|*4.1   |  | Specimen Common Stock Certificate of Company                                                                                                                                                                                                                                                                          
|*4.2   |  | Agreement dated March 15, 1994, among Richard L. Kramer, the A.J. 1989 Trust, the Irrevocable Intervivos Trust for the Benefit of the Kramer Children, the N Street Investment Trust, Equity Resources Associates, Herbert S. Miller, The Mills
Corporation and The Mills Limited Partnership (filed as Exhibit 10.19)
|**4.3  |  | Non-Affiliate Registration Rights and Lock-Up Agreement                                                                                                                                                                                                                                                               
|**4.4  |  | Affiliate Registration Rights and Lock-Up Agreement                                                                                                                                                                                                                                                                   
|*10.1  |  | Form of Employee Non-Compete/Employment Agreements                                                                                                                                                                                                                                                                    
|++10.2 |  | 1994 Executive Equity Incentive Plan                                                                                                                                                                                                                                                                                  
|**10.3 |  | Limited Partnership Agreement of Operating Partnership                                                                                                                                                                                                                                                                
|*10.4  |  | Form of Noncompetition Agreement between the Company, the Operating Partnership and each of Kan Am and the Kan Am Partnerships                                                                                                                                                                                        
|*10.5  |  | Form of Noncompetition Agreement with Kan Am Directors                                                                                                                                                                                                                                                                
|*10.10 |  | Agreement dated March 15, 1994 among Richard L. Kramer, the A.J. 1989 Trust, the Irrevocable Intervivos Trust for the Benefit of the Kramer Children, the N Street Investment Trust, Equity Resources Associates, Herbert S. Miller, The Mills Corporation
and The Mills Limited Partnership                          
|*10.11 |  | Form of Indemnification Agreement between the Company and each of its Directors and Executive Officers Partnership to CS First Boston Mortgage Capital Corp., as Mortgagee dated as of December 17, 1996                                                                                                              
|#21.1  |  | List of Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                
|#23    |  | Consent of Ernst & Young LLP, Independent Auditors                                                                                                                                                                                                                                                                    

---

|*   |  | Incorporated by reference to the Registrant's Registration Statement on Form S-11, Registration No. 33-71524, which was declared effective by Securities and Exchange Commission on April 14,
1994.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**  |  | Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the first quarter ended March 31, 1994.                                                                            
|+   |  | Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the second quarter ended June 30, 1997.                                                                            
|++  |  | Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the third quarter ended September 30, 1997.                                                                        
|+++ |  | Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.                                                                                     
|#   |  | Filed herewith.                                                                                                                                                                                    

71

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14(b) REPORTS ON FORM 8-K

The Company filed two reports on Form 8-K during the last quarter of the year ended December 31, 2000.

The
Company's Current Report on Form 8-K dated October 3, 2000 and filed on October 18, 2000 announcing the Company's purchase of 46 single tenant
A-rated credit net lease properties and filing pro forma consolidated balance sheets and statement of operations.

The
Company's Current Report on Form 8-K dated September 30, 2000, and filed on November 14, 2000, made available supplemental financial information
concerning the Company, and the properties owned or managed by it as of September 30, 2000, in the form of a Supplemental Information Package.

14(c) EXHIBITS

The list of exhibits filed with this report is set forth in response to item 14(a)(3). The required exhibit index has been filed with the exhibits.

14(d) FINANCIAL STATEMENTS SCHEDULES

Schedule IIIReal Estate and Accumulated Depreciation

Notes
to Schedule III.

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 26, 2000:

| |  | THE MILLS CORPORATION, a Delaware corporation
| |  | ---------------------------------------------
| |  | By:                                          

72

---

Pursuant to the requirements of the Securities Act, this report has been signed by the following persons in the capacities indicated below on March 26, 2000:

|Name                                              |  | Title                                                                                                                      
|------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------
|/s/LAURENCE C. SIEGELLaurence C. Siegel           |  | Chairman of the Board, Chief Executive Officer and Director (principal executive officer)                                  
|/s/PETER B. MCMILLANPeter B. McMillan             |  | President, Chief Operating Officer and Director                                                                            
|/s/JAMES F. DAUSCHJames F. Dausch                 |  | Senior Executive Vice-President  Development and Director                                                                 
|/s/KENNETH R. PARENTKenneth R. Parent             |  | Executive Vice PresidentFinance and Chief Financial Officer (principal financial officer and principal accounting officer)
|/s/DIETRICH VON BOETTICHERDietrich Von Boetticher |  | Vice Chairman and Director                                                                                                 
|/s/JOHN M. INGRAMJohn M. Ingram                   |  | Vice Chairman and Director                                                                                                 
|/s/CHARLES R. BLACK, JR.Charles R. Black, Jr.     |  | Director                                                                                                                   
|/s/JAMES C. BRAITHWAITEJames C. Braithwaite       |  | Director                                                                                                                   
|/s/JOSEPH B. GILDENHORNJoseph B. Gildenhorn       |  | Director                                                                                                                   
|/s/HARRY H. NICKHarry H. Nick                     |  | Director                                                                                                                   
|/s/FRANZ VON PERFALLFranz von Perfall             |  | Director                                                                                                                   
|Robert P. Pincus                                  |  | Director                                                                                                                   
|/s/CRISTINA L. ROSECristina L. Rose               |  | Director                                                                                                                   

73

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REPORT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS
THE MILLS CORPORATION

We have audited the accompanying consolidated balance sheets of The Mills Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2000. Our audits also included the financial statement schedule listed in
the Index at Item 14(a). These financial statements and schedule are the responsibility of the management of The Mills Corporation. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Mills Corporation as of
December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.



McLean,
Virginia
February 20, 2001, except for the
fourth paragraph of Note 1, as
to which the date is August 6, 2001

F1

---



THE MILLS CORPORATION        CONSOLIDATED BALANCE SHEETS        (In thousands except share data)

|                                                            |                                                | December 31,                               |             
|----------------------------------------------------------- | ---------------------------------------------- | ------------------------------------------ | ------------
|
|ASSETS                                                      |                                               
|Income producing property                                   |                                                |                                            |             
|                                                            | Land and land improvements                     |                                            | $           
|                                                            | Building and improvements                      |                                            |             
|                                                            | Furniture, fixtures and equipment              |                                            |             
|                                                            | Less accumulated depreciation and amortization |                                            |             
|                                                            |                                                |                                            |             
|                                                            |                                                | Net income producing property              |             
|Land held for investment and/or sale                        |                                                |                                            | 8,715       
|Construction in progress                                    |                                                |                                            | 65,014      
|Investment in unconsolidated joint ventures                 |                                                |                                            | 230,613     
|                                                            |                                                |                                            |             
|                                                            |                                                | Net real estate and development assets     |             
|Cash and cash equivalents                                   |                                                |                                            | 10,447      
|Restricted cash                                             |                                                |                                            | 14,530      
|Accounts receivable, net                                    |                                                |                                            | 32,322      
|Notes receivable                                            |                                                |                                            | 8,011       
|Deferred costs, net                                         |                                                |                                            | 39,769      
|Other assets                                                |                                                |                                            | 4,401       
|                                                            |                                                |                                            |             
|                                                            |                                                |                                            | TOTAL ASSETS
|                                                            |                                                |                                            |             
|LIABILITIES AND STOCKHOLDERS' EQUITY                        |                                               
|Mortgages, notes, and loans payable                         |                                                | $                                          | 966,505     
|Accounts payable and other liabilities                      |                                                |                                            | 78,867      
|                                                            |                                                |                                            |             
|                                                            |                                                | Total liabilities                          |             
|                                                            |                                                |                                            |             
|Minority interests                                          |                                                |                                            | 32,385      
|Common stock $.01 par value, authorized 100,000,000 shares, |                                                |                                            |             
|issued and outstanding 23,408,824 and 23,192,041 shares     |                                                |                                            |             
|in 2000 and 1999, respectively                              |                                                |                                            | 234         
|Additional paid-in capital                                  |                                                |                                            | 444,689     
|Accumulated deficit                                         |                                                |                                            | (394,009    
|Deferred compensation                                       |                                                |                                            | (2,980      
|                                                            |                                                |                                            |             
|                                                            |                                                | Total stockholders' equity                 |             
|                                                            |                                                |                                            |             
|                                                            |                                                | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |             
|                                                            |                                                |                                            |             

See
Accompanying Notes to Consolidated Financial Statements.

F2

---



THE MILLS CORPORATION        CONSOLIDATED STATEMENTS OF INCOME        (In thousands, except share and dividend data)

|                                                                                      |                                            | Years Ended December 31, |        
|------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------ | -------
|
|REVENUES:                                                                             |                                            |                          |        
|                                                                                      | Minimum rent                               |                          | $      
|                                                                                      | Percentage rent                            |                          |        
|                                                                                      | Recoveries from tenants                    |                          |        
|                                                                                      | Other property revenue                     |                          |        
|                                                                                      | Management fee income, from affiliates     |                          |        
|                                                                                      | Other fee income, from affiliates          |                          |        
|                                                                                      | Interest income                            |                          |        
|                                                                                      |                                            |                          |        
|                                                                                      |                                            |                          | 190,711
|                                                                                      |                                            |                          |        
|EXPENSES:                                                                             |                                            |                          |        
|                                                                                      | Recoverable from tenants                   |                          |        
|                                                                                      | Other operating                            |                          |        
|                                                                                      | General and administrative                 |                          |        
|                                                                                      | Interest expense, net                      |                          |        
|                                                                                      | Depreciation and amortization              |                          |        
|                                                                                      |                                            |                          |        
|                                                                                      |                                            |                          | 160,187
|                                                                                      |                                            |                          |        
|Other income (expense)                                                                |                                            |                          | (4,210 
|Gain on sale of community centers                                                     |                                            |                          | 18,370 
|Equity in earnings of unconsolidated joint ventures
before extraordinary items        |                                            |                          | 16,571 
|                                                                                      |                                            |                          |        
|Income before extraordinary items and minority interests                              |                                            |                          | 61,255 
|Extraordinary loss on debt extinguishments                                            |                                            |                          | (3,147 
|Equity in extraordinary loss on debt extinguishments
of unconsolidated joint ventures |                                            |                          | (347   
|                                                                                      |                                            |                          |        
|Income before minority interests                                                      |                                            |                          | 57,761 
|Minority interests                                                                    |                                            |                          | (23,341
|                                                                                      |                                            |                          |        
|Net income                                                                            |                                            | $                        | 34,420 
|                                                                                      |                                            |                          |        
|EARNINGS PER COMMON SHARE  BASIC:                                                    |                                            |                          |        
|                                                                                      | Income before extraordinary items          |                          | $      
|                                                                                      | Extraordinary loss on debt extinguishments |                          |        
|                                                                                      |                                            |                          |        
|                                                                                      |                                            | Net income               |        
|                                                                                      |                                            |                          |        
|EARNINGS PER COMMON SHARE  DILUTED:                                                  |                                            |                          |        
|                                                                                      | Income before extraordinary items          |                          | $      
|                                                                                      | Extraordinary loss on debt extinguishments |                          |        
|                                                                                      |                                            |                          |        
|                                                                                      |                                            | Net income               |        
|                                                                                      |                                            |                          |        
|WEIGHTED AVERAGE NUMBER OF SHARES:                                                    |                                            |                          |        
|                                                                                      | Basic                                      |                          |        
|                                                                                      |                                            |                          |        
|                                                                                      | Diluted                                    |                          |        
|                                                                                      |                                            |                          |        
|TAX TREATMENT OF DIVIDENDS (UNAUDITED):                                               |                                            |                          |        
|                                                                                      | Ordinary income per common share           |                          | $      
|                                                                                      | Capital gains per common share             |                          |        
|                                                                                      | Return of capital per common share         |                          |        
|                                                                                      |                                            |                          |        
|                                                                                      | Dividends paid per common share            |                          | $      
|                                                                                      |                                            |                          |        

See Accompanying Notes to Consolidated Financial Statements.

F3

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THE MILLS CORPORATION        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  (In thousands)

|                                                   |  | Common
Stock
(Shares) |  | Common
Stock |     | Additional
Paid-In
Capital |   | Accumulated
Deficit |  | Deferred
Compensation |          | Total |  
|-------------------------------------------------- |  | --------------------- |  | ------------ | --- | -------------------------- | - | ------------------- |  | --------------------- | -------- | ----- | -
|BALANCES, DECEMBER 31, 1997                        |  | 22,912                |  | $            | 229 |                            | $ | 436,639             |  | $                     | (337,142 | )     | $
|Restricted stock incentive program                 |  | 55                    |  |              |    |                            |   | 1,340               |  |                       |         |       |  
|Amortization of restricted stock incentive program |  |                      |  |              |    |                            |   |                    |  |                       |         |       |  
|Units exchanged for common stock                   |  | 110                   |  |              | 1   |                            |   | 444                 |  |                       | (445     | )     |  
|Exercise of stock options                          |  | 55                    |  |              | 1   |                            |   | 1,025               |  |                       |         |       |  
|Dividends declared                                 |  |                      |  |              |    |                            |   |                    |  |                       | (45,069  | )     |  
|Net income                                         |  |                      |  |              |    |                            |   |                    |  |                       | 23,252   |       |  
|                                                   |  |                       |  |              |     |                            |   |                     |  |                       |          |       |  
|BALANCES, DECEMBER 31, 1998                        |  | 23,132                |  |              | 231 |                            |   | 439,448             |  |                       | (359,404 | )     |  
|Restricted stock incentive program                 |  | 60                    |  |              | 1   |                            |   | 1,476               |  |                       |         |       |  
|Amortization of restricted stock incentive program |  |                      |  |              |    |                            |   |                    |  |                       |         |       |  
|Dividends declared                                 |  |                      |  |              |    |                            |   |                    |  |                       | (47,125  | )     |  
|Net income                                         |  |                      |  |              |    |                            |   |                    |  |                       | 27,223   |       |  
|BALANCES, DECEMBER 31, 1999                        |  | 23,192                |  |              | 232 |                            |   | 440,924             |  |                       | (379,306 | )     |  
|                                                   |  |                       |  |              |     |                            |   |                     |  |                       |          |       |  
|Restricted stock incentive program                 |  | 168                   |  |              | 2   |                            |   | 2,883               |  |                       |         |       |  
|Amortization of restricted stock incentive program |  |                      |  |              |    |                            |   |                    |  |                       |         |       |  
|Units exchanged for common stock                   |  | 3                     |  |              |    |                            |   | 53                  |  |                       | (53      | )     |  
|Exercise of stock options                          |  | 46                    |  |              |    |                            |   | 829                 |  |                       |         |       |  
|Dividends declared                                 |  |                      |  |              |    |                            |   |                    |  |                       | (49,070  | )     |  
|Net income                                         |  |                      |  |              |    |                            |   |                    |  |                       | 34,420   |       |  
|                                                   |  |                       |  |              |     |                            |   |                     |  |                       |          |       |  
|BALANCES, DECEMBER 31, 2000                        |  | 23,409                |  | $            | 234 |                            | $ | 444,689             |  | $                     | (394,009 | )     | $
|                                                   |  |                       |  |              |     |                            |   |                     |  |                       |          |       |  

See Accompanying Notes to Consolidated Financial Statements.

F4

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THE MILLS CORPORATION        CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

|                                                                                                        |                                                   | Years Ended December 31,                                                              |         
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------------------------------------- | --------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                   |                                                   |                                                                                       |         
|Income before minority interests                                                                        |                                                   | $                                                                                     | 57,761  
|Adjustments to reconcile income before minority
interests to net cash provided by operating activities: |                                                   |                                                                                       |         
|                                                                                                        |                                                   | Net accretion of note receivable                                                      |         
|                                                                                                        |                                                   | Depreciation and amortization                                                         |         
|                                                                                                        |                                                   | Write-off of abandoned projects                                                       |         
|                                                                                                        |                                                   | Provision for losses on accounts receivable                                           |         
|                                                                                                        |                                                   | Equity in earnings of unconsolidated joint ventures
before extraordinary item         |         
|                                                                                                        |                                                   | Gain on sales of property                                                             |         
|                                                                                                        |                                                   | Gain on sale of community centers                                                     |         
|                                                                                                        |                                                   | Extraordinary loss on debt extinguishments                                            |         
|                                                                                                        |                                                   | Equity in extraordinary loss on debt extinguishments
of unconsolidated joint ventures |         
|                                                                                                        |                                                   | Amortization of restricted stock incentive program                                    |         
|Other changes in assets and liabilities:                                                                |                                                   |                                                                                       |         
|                                                                                                        |                                                   | Accounts receivable                                                                   |         
|                                                                                                        |                                                   | Notes receivable                                                                      |         
|                                                                                                        |                                                   | Other assets                                                                          |         
|                                                                                                        |                                                   | Accounts payable and other liabilities                                                |         
|                                                                                                        |                                                   |                                                                                       |         
|Net cash provided by operating activities                                                               |                                                   |                                                                                       | 78,386  
|                                                                                                        |                                                   |                                                                                       |         
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                   |                                                   |                                                                                       |         
|Investment in real estate and development assets                                                        |                                                   |                                                                                       | (138,450
|Distributions received from unconsolidated joint ventures                                               |                                                   |                                                                                       | 44,003  
|Proceeds from sale of community centers, net                                                            |                                                   |                                                                                       | 22,536  
|Proceeds from sale of property, net                                                                     |                                                   |                                                                                       | 3,840   
|Notes receivable                                                                                        |                                                   |                                                                                       |        
|Deferred costs                                                                                          |                                                   |                                                                                       | (9,971  
|                                                                                                        |                                                   |                                                                                       |         
|Net cash used in investing activities                                                                   |                                                   |                                                                                       | (78,042 
|                                                                                                        |                                                   |                                                                                       |         
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                   |                                                   |                                                                                       |         
|Proceeds from mortgages, notes and loans payable                                                        |                                                   |                                                                                       | 397,436 
|Repayments of mortgages, notes and loans payable                                                        |                                                   |                                                                                       | (301,711
|Refinancing costs                                                                                       |                                                   |                                                                                       | (5,542  
|(Increase) decrease in restricted cash                                                                  |                                                   |                                                                                       | (2,347  
|Dividends paid                                                                                          |                                                   |                                                                                       | (49,070 
|Distributions to minority interests                                                                     |                                                   |                                                                                       | (32,527 
|Proceeds from exercise of stock options                                                                 |                                                   |                                                                                       | 829     
|                                                                                                        |                                                   |                                                                                       |         
|Net cash provided by financing activities                                                               |                                                   |                                                                                       | 7,068   
|                                                                                                        |                                                   |                                                                                       |         
|Net increase (decrease) in cash and cash equivalents                                                    |                                                   |                                                                                       | 7,412   
|Cash and cash equivalents, beginning of year                                                            |                                                   |                                                                                       | 3,035   
|                                                                                                        |                                                   |                                                                                       |         
|Cash and cash equivalents, end of year                                                                  |                                                   | $                                                                                     | 10,447  
|                                                                                                        |                                                   |                                                                                       |         
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                                     |                                                   |                                                                                       |         
|                                                                                                        | Cash paid for interest, net of amount capitalized |                                                                                       | $       
|                                                                                                        |                                                   |                                                                                       |         

See Accompanying Notes to Consolidated Financial Statements.

F5

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THE MILLS CORPORATION        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (In thousands, except share data)

1.  ORGANIZATION

The Mills Corporation (the "Company") is a fully integrated, self-managed real estate investment trust ("REIT").

The
Company conducts all of its business through The Mills Limited Partnership (the "Operating Partnership"), in which it owns a 1% interest as the sole general partner and a 58.68%
interest as a limited partner as of December 31, 2000. The Company, through the Operating Partnership, is engaged in the ownership, development, redevelopment, leasing, acquisition, expansion,
and management of super-regional, retail and entertainment-oriented centers (the "Mills" and "Block" projects), a community shopping center and a portfolio of single tenant net lease properties ("Net
Lease Properties") at various locations throughout the United States. As of December 31, 2000, the Operating
Partnership owns or holds an interest in the following Mills, Block and community center operating properties:

MILLS

LOCATIONFranklin Mills

Philadelphia, PAGurnee Mills

Gurnee, IL (Chicago)Potomac Mills

Woodbridge, VA (Washington, DC)Sawgrass Mills

Sunrise, FL (Ft. Lauderdale)Ontario Mills

Ontario, CA (Los Angeles)Grapevine Mills

Grapevine, TX (Dallas/Fort Worth)Arizona Mills

Tempe, AZ (Phoenix)The Oasis at Sawgrass

Sunrise, FL (Ft. Lauderdale)Concord Mills

Concord, NC (Charlotte)Katy Mills

Katy, TX (Houston)Opry Mills

Nashville, TNArundel Mills

Anne Arundel County, MD (Baltimore/Washington, DC)


BLOCKThe Block at Orange

Orange, CA (Los Angeles)


COMMUNITY CENTERLiberty Plaza

Philadelphia, PA


The Company is actively involved in the predevelopment of a number of projects, including Discover Mills (Atlanta, GA), Colorado Mills (Denver, CO), Missouri Mills (St. Louis, MO),
Vaughan Mills (Toronto, Canada), and Meadowlands Mills (Carlstadt, NJ).

At December 31, 2000, the Operating Partnership owns 5% of the voting common stock and 99% of the non-voting preferred stock of MillsServices Corporation ("MSC"), an entity
formed in connection with the Company's initial public offering to provide development, management, leasing, and financial services to entities owned by affiliates of the Company. MSC also owns 100%
of Mills Enterprises, Inc., an entity that owns FoodBrand (the Company's food and beverage entity that was created in 1999 to master lease and operate food courts at the Company's malls). MSC
does not

F6

---

perform any services to entities in which the Company is not a significant investor. Through its ownership of 99% of MSC's non-voting preferred stock, the Operating Partnership has the perpetual



right to receive 99% of the economic benefits (i.e., cash flows) generated by MSC's operations. The Company provides all of the operating capital of MSC. Two individuals, who have contributed nominal
amounts of equity of MSC for 95% of MSC's voting common shares, are officers and directors of both MSC and the Company. These two individuals' interests are aligned with the interests of the Company's
management. Also, all of MSC's Board members are also Board members of the Company. All of these factors result in the Company having a controlling financial interest in MSC, and therefore, the
operations of MSC have been consolidated by the Company.

In August 2001, the Operating Partnership acquired 95% of MSC's voting common stock and 1% of MSC's non-voting preferred stock that it did not already own for fair market value,
totaling $170.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company conducts its business through its Operating Partnership, wholly-owned subsidiaries and affiliates. The consolidated financial statements include
the accounts of the Company and all subsidiaries that the Company controls. The Company does not consider itself to be in control of an entity when major business decisions require the approval of at
least one other general partner. Accordingly, the Company accounts for its joint venturesSee Note 7under the equity method.

All
significant intercompany transactions and balances have been eliminated in consolidation. Minority interests represent the ownership interests in the Operating Partnership not
held by the Company.

REAL ESTATE AND DEVELOPMENT ASSETS

Income producing property is stated at cost and includes all costs related to acquisition, development, leasing and construction, including tenant
improvements, interest incurred during construction and certain direct and indirect costs of development. Land held for sale is carried at the lower of cost or fair value less costs to sell.
Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements, which improve or extend the useful life of the assets are
capitalized.

Income
producing properties are individually evaluated for impairment when various conditions exist which may indicate that it is probable that the sum of expected future cash flows
(on an undiscounted basis) from a property are less than its historical net cost basis. Upon determination that a permanent impairment has occurred, the Company records an impairment charge equal to
the excess of historical cost basis over fair value. In addition, the Company writes off costs related to predevelopment projects when it determines that it will no longer pursue the project.

F7

---

Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, as follows:

Buildings and improvements

40 yearsLand improvements

20 yearsFurniture, fixtures and equipment

7 years


Total
depreciation expense was $26,598, $25,130 and $26,504 for the years ended December 31, 2000, 1999 and 1998 respectively.

Total
interest expense capitalized to real estate and development assets, including investments in unconsolidated joint ventures under development, was $21,058, $13,065 and $8,761 for
the years ended December 31, 2000, 1999 and 1998, respectively.

REVENUE RECOGNITION

The Company, as lessor, has retained substantially all the risks and benefits of ownership and accounts for its leases as operating leases. Minimum rent from
income producing properties is recognized on a straight-line basis over the terms of the respective leases. Percentage rent is recognized when tenant's sales have reached breakpoints
stipulated in the leases. Recoveries from tenants for real estate taxes and other operating expenses are recognized as revenue in the period the applicable costs are incurred.

Management,
leasing and development fees relating to entities not wholly-owned by the Company are recognized as revenue as they are earned.

OTHER PROPERTY REVENUE

Other property revenue generally consists of revenues from tenants with lease agreements of one year or less, revenues from rentals of temporary in-line space,
kiosks and ATM space rentals. It also includes revenues received from lease termination agreements or subsequent collection of receivables previously written off.

DEFERRED COSTS

Deferred costs consist of loan fees and related expenses which are amortized on a straight-line basis that approximates the interest method over
the terms of the related notes. In addition, deferred costs include leasing charges, comprised of tenant construction allowances and direct salaries and other costs incurred by the Company to
originate a lease, which are amortized on a straight-line basis over the terms of the related leases. Total amortization expense was $14,366, $11,539 and $10,421 for the years ended
December 31, 2000, 1999 and 1998, respectively. Total accumulated amortization of deferred costs was $64,706 and $69,123 at December 31, 2000 and 1999, respectively.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

F8

---

RESTRICTED CASH

Restricted cash consists primarily of funds invested in cash collateral accounts. The purpose of the cash collateral accounts is to hold proceeds from certain
transactions and to fund maintenance reserves, interest, taxes and payments on debt. The cash collateral accounts are controlled by the lenders.

ACCOUNTS RECEIVABLE

Accounts receivable includes amounts billed to tenants, deferred rent receivable arising from straight-lining of rents and accrued recoveries from tenants.
Management evaluates the collectibility of these receivables and adjusts the allowance for doubtful accounts to reflect the amounts estimated to be uncollectible. The allowance for doubtful accounts
was $3,148 and $3,829 at December 31, 2000 and 1999, respectively.

INCOME TAXES

Federal income taxes are not provided for because the Company believes it qualifies as a REIT under the provisions of the Internal Revenue Code ("IRC") and
will distribute in excess of its taxable income to its shareholders. As a REIT, the Company is required to distribute at least 95% of its taxable income to shareholders and to meet certain other
requirements. The differences between net income available to common shareholders for financial reporting purposes and taxable income before dividend deductions relate primarily to temporary
differences, principally real estate depreciation.

MSC,
the Company's consolidated IRC subchapter C corporate subsidiary, is subject to federal income taxes at the prevailing tax rates. MSC has a federal net operating loss
carryforward of $33,209 at December 31, 1999, and the Company estimates that the federal net operating loss carryforward will be approximately $40,000 December 31, 2000. A valuation
allowance has been established for deferred tax
assets principally relating to the loss carryforward as there can be no assurance that MSC will generate taxable income in future years.

For
taxable years beginning on or after January 1, 2001, Federal income tax law generally allows a REIT to own stock in one or more subsidiaries ("taxable REIT subsidiaries")
engaged in businesses that generate income that would not constitute qualifying income under the REIT income test. Additionally, Federal income tax imposes certain limitations on the value of the
stock in these taxable REIT subsidiaries. Both the REIT and the taxable REIT subsidiaries are subject to strict Federal income tax rules governing their ownership, operation and taxation. As of
January 1, 2001, MSC and its subsidiaries filed an election to be treated as taxable REIT subsidiary.

SEGMENT REPORTING

Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise
and Related Information" ("SFAS 131"). SFAS 131 defines an operating segment as a component of an enterprise that engages in business activities that generate revenues and incur
expenses, which operating results are reviewed by the chief operating decision maker in the determination of resource allocation and performance, and for which discrete financial information is
available. The Company's properties consist of "Mills" super-regional value and entertainment oriented malls, "Block" retail and entertainment properties, a community

F9

---

retail shopping center, food court operations, a portfolio of Net Lease Properties and other retail operations. Each of the Company's Mills and Blocks are separate operating segments which have been
aggregated and reported as one reportable segment because they have characteristics so similar that they are expected to have essentially the same future prospects. These economic characteristics
include similar returns, occupancy and tenants and each is located near a metropolitan area which similar economic demographics and site characteristics. This reportable segment consists of greater
than 90% of the Company's assets, revenues and income for each of the years presented. The Company currently has no operations in foreign countries that generate revenue and expenses.

EARNINGS PER SHARE

Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects the assumed conversion of stock issued pursuant to the Company's restricted stock program and stock option incentive program using the treasury stock
method.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In June 1998, the Financial Accounting Standards Board issued Statement No. 133, as later amended by SFAS 138, "Accounting for Derivative
Instruments and Hedging Activities" (collectively the "Statement"), which is required to be adopted in years beginning after June 15, 2000. The Statement permits early adoption as of the
beginning of any fiscal quarter after its issuance. The Statement is effective for the Company commencing January 1, 2001. The Statement will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value and reflected as income or expense. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The effect of this change in accounting will not have significant impact on the Company's results of operations and financial
position.

STOCK OPTION PLAN

The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation," ("SFAS 123") requires use of option
valuation models that were not developed for use in valuing employee stock options. Under APB 25, when the exercise price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

TAX INCREMENT FINANCING

The Company considers the requirements of EITF 91-10, "Accounting for Special Assessments and Tax Increment Financing
Entities" (effective May 1992) in assessing the need to record an obligation for these forms of project infrastructures financing. These requirements include consideration of
whether

F10

---

the assessment is fixed or variable and an evaluation under SFAS No. 5, "Accounting for Contingencies," of the probability of the Company becoming obligated for the project infrastructure
financing.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain amounts in the 1999 and 1998 consolidated financial statements have been reclassified to conform with the current year presentation.

3.  DISPOSITION OF COMMUNITY CENTERS

In August 2000, the Company sold ten of its community centers (the "Disposed Properties") to an unrelated third party for $142,000. Net proceeds to the
Company after assumption of the mortgage notes of $111,600 and closing costs of $7,864 were $22,536. The assumption of debt has been treated as a non-cash financing activity for cash flow
purposes.

A
summary of operations for the Community Centers for the years ended December 31, 2000 (through the date of sale), 1999 and 1998, is as follows:

Years Ended December 31,2000

1999

1998Revenues

$
12,809

$
21,330

$
21,116Interest expense


4,935


8,211


6,271Depreciation expense


2,523


4,438


3,982Other expense


3,363


5,775


5,733


4.  ACQUISITION OF A PORTFOLIO OF NET LEASED PROPERTIES

During the third and fourth quarters of 2000, the Company acquired 46 Net Lease Properties for an aggregate purchase price of $114,000 through the assumption
$105,200 of mortgage notes and $8,800 cash payment. The Net Lease Properties were purchased from unrelated third parties and are subject to single tenant net leases operating as CVS. The leases are
triple net leases that contain indemnification for liabilities customarily associated with possession of the site (including without limitation, certain specified environmental liabilities). The
tenants' obligations under the leases are guaranteed by CVS Corporation, a Delaware Corporation. For the year ended December 31, 2000, total revenues and expenses included $2,518 of rental
revenues, $2,039 of interest expenses and $653 of
depreciation expense related to the Net Lease Properties. The assumption of debt has been treated as a non-cash financing activity for cash flow purposes.

F11

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THE MILLS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except share data)

5.  OTHER INCOME (EXPENSE)

Other income (expense) consists of land sales gains, abandoned project costs and operating margins and start-up costs associated with the Company's
FoodBrand and other retail operations as follows:

Years Ended December 31,2000

1999

1998FoodBrand and other retail income (loss)Revenues

$
25,759

$
5,737

$
Expenses


(23,781
)

(6,506
)

Start-up costs


(1,126
)

(1,094
)

Abandoned projects


(6,279
)

(1,675
)

(796
)Land sale gains


1,255


1,895


Other


(38
)




Total other expense

$
(4,210
)
$
(1,643
)
$
(796
)


6.  Notes Receivable

Notes receivable include $4,387 and $5,243 at December 31, 2000 and 1999, respectively, relating to a reimbursement and annexation agreement with the
Village of Gurnee ("Village") to reimburse the owner of Gurnee Mills for the cost of certain public improvements. The Village has executed a non-interest bearing note for $15,000 to be
paid from taxes collected from tenants of Gurnee Mills during a ten-year period beginning one year after Gurnee Mills opened in August 1991. In 1996, the note was amended and the
note amount increased to $17,500 to be paid over a thirteen-year period. The note was recorded in 1991 at its net present value based on the estimated taxes to be collected by the Village
using a discount rate of 10%. Interest income accreted was $470, $532 and $700 for the years ended December 31, 2000, 1999 and 1998, respectively. For the years ended December 31, 2000,
1999 and 1998, collections from the Village totaled $1,386, $1,210 and $1,359, respectively.

Notes
receivable include $1,582 and $1,445 at December 31, 2000 and 1999, respectively, relating to loans made to certain members of management to fund purchases of the
Company's common stock on the open market. The notes are fully recourse, mature in September 2002 with interest accrued monthly at 8.0%.

F12

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7.  Investment in Unconsolidated Joint Ventures

Certain operating properties and properties under development are partially owned through joint ventures ("Joint Ventures") in which the Company is also a
co-general and co-managing partner. The Company's ownership interest in each Joint Venture as of December 31, 2000, is as follows:

Joint Venture

Ownership %Ontario Mills

50.0
%Grapevine Mills

37.5
%Arizona Mills

36.8
%The Block at Orange

50.0
%The Oasis at Sawgrass

50.0
%Concord Mills

37.5
%Katy Mills

62.5
%Opry Mills

66.7
%Arundel Mills

37.5
%Discover Mills

50.0
%Meadowlands Mills

66.7
%


In
addition to the above joint ventures, MEI holds investments in certain Retail JV's.

In
connection with the Joint Venture agreements, the Company is committed to providing certain levels of equity in addition to the amounts invested to date. The Company has guaranteed
repayment of $269,008 of the Joint Venture debt until certain debt service coverage tests are met. In addition, the Company is contingently liable for property taxes and assessments levied against
Ontario Mills Limited
Partnership by the City of Ontario Special Assessment District ("City"). The remaining aggregate amount of the special tax assessment is approximately $15,071 and will be collected through 2020 to
fund debt service on bonds issued by the City to fund infrastructure improvements.

The
Company's real estate joint venture agreements contain buy-sell provisions whereby certain partners can require the purchase or sale of ownership interests among
certain partners.

F13

---

Condensed combined balance sheets and statements of income for unconsolidated joint ventures are as follows:

December 31,Condensed Combined Balance Sheets2000

1999ASSETS:Income producing assets

$
1,188,334

$
871,608Construction in progress


224,361


304,168Other


552,453


448,715Total assets

$
1,965,148

$
1,624,491LIABILITIES AND PARTNERS' EQUITY:Debt

$
1,303,665

$
947,975Other liabilities


147,260


162,282Operating Partnership's accumulated equity


168,503


165,801Joint Venture partners' accumulated equity


345,720


348,433Total liabilities and partners' equity

$
1,965,148

$
1,624,491


Years Ended December 31,Condensed Combined Income Statements2000

1999

1998Revenues

$
239,521

$
149,751

$
98,342Recoverable and other property expenses


(68,611
)

(43,349
)

(30,010
)Interest expense


(77,587
)

(45,557
)

(29,735
)Depreciation and amortization


(72,192
)

(40,918
)

(24,416
)Other


11,787


6,513


7,253Extraordinary loss on debt extinguishments


(943
)




(8,878
)Net income

$
31,975

$
26,440

$
12,556Equity in earnings of unconsolidated joint ventures before extraordinary loss

$
16,571

$
12,287

$
8,097Equity in extraordinary loss on debt Extinguishments of unconsolidated joint ventures

$
(347
)
$


$
(3,518
)


Significant
accounting policies used by the unconsolidated joint ventures are similar to those used by the Company.

The
primary difference between the carrying value of the Company's investment in unconsolidated joint ventures and the Operating Partnership's accumulated equity noted above is due to
capitalized interest on the investment balance, capitalized development and leasing costs which are recovered by the Operating Partnership through fees during construction, and loans and advances to
the Joint Ventures included in other liabilities above.

F14

---

In connection with the refinancing of debt during the year ended December 31, 2000, the Arizona Mills joint venture recognized an extraordinary loss on debt extinguishment
totaling $943 due to the write-off of deferred loan costs. The Company's share of the loss was $347.

In
connection with the refinancing of debt in 1998, the Grapevine Mills and Ontario Mills joint ventures recognized extraordinary losses on debt extinguishments totaling $8,878 due to
the write-off of unamortized deferred loan costs of $3,327 and the payment of a prepayment penalty of $5,551. The Company's share of the losses was $3,518.

In
August 1998, Simon Property Group ("Simon"), Chelsea GCA Reality Partnership, L.P. ("Chelsea"), formed a joint venture ("Houston I") which purchased a site for a
future shopping center development
located approximately two miles from a site where Katy Mills Limited Partnership ("Katy"), an unconsolidated joint venture, was developing a shopping center. Katy is owned 67.5% by the Company and
32.5% by Kan Am (a major unit holder of the Company's Operating Partnership). The Company's believed that Simon's participation in Houston I constituted a breach of other agreements between the
Company and Simon. To ensure the economic potential of the Katy Mills developments, Katy filed a suit against Simon and Chelsea. In October 1998, Katy executed a settlement agreement with Chelsea and
Simon whereby Katy purchased Chelsea's interest in Houston I for $11,600 and Katy would make additional payments aggregating $21,400 over a four year period as consideration for not building a
similar project nearby. The Company's future payments were secured by a pledge of 639,507 shares of the Company's stock which has been reduced pro rata as payments are made. The obligation was reduced
to $4,600 and the number of shares pledged were reduced to 319,239, after the January 2001 payment.

The
purchase of Chelsea's interest in Houston I totaling $11,600 has been recorded on Katy's books as investment in partnership. The $21,400 payments was capitalized on Katy's
books as a development cost as it was directly associated with the development of the Katy Mills. Based on the Katy's ability to develop Katy Mills and execute long term leases with tenants, Katy is
amortizing the $21,400 Chelsea payment over the period in which Katy benefits, which had been estimated at twenty years.

8.  Mortgages, Notes And Loans Payable

Mortgages, notes, and loans payable, consist of the following at December 31, 2000 and 1999:

2000

1999The Mills Limited Partnership $75,000 unsecured revolving loaninterest payable monthly at LIBOR plus 2.75%, subject to certain leverage tests, maturing in June 2002 (with a one year extension option).

$
75,000

$
The Mills Limited Partnership $50,000 term loaninterest at LIBOR plus 2.25% due monthly with principal reductions of $5,000 and $10,000 in June 2001 and June 2002, respectively; maturing June 2003.


50,000





F15

---

The Mills Limited Partnership $100,000 revolving line of creditinterest payable monthly at LIBOR plus 2.50%. This loan was refinanced in June 2000.

$


$
100,000Potomac Mills/Gurnee Mills securitized bondsprincipal and interest payments based on 30-year amortization with an anticipated balloon payment in December 2003, and required maturity in 2026; weighted average interest rate of 7.02% (See Note
15).


271,148


274,704Franklin Mills and Liberty Plaza mortgage loanprincipal and interest payments based on 30-year amortization with an anticipated balloon payment in May 2007 and required maturity in 2027; interest rate at 7.88% per annum on $110,000 7.44% on
$20,000, and 6.22% on $13,000.


138,324


139,867Sawgrass Mills $285,000 financing ($185,000 mortgage loan and $100,000 mezzanine loan)interest only payments through maturity in June 2001; blended interest rate of LIBOR plus 2.75%.


285,000


Sawgrass Mills securitized bondsinterest only payments through maturity in January 2001; fixed interest rate of 6.45% on $115,000; interest at LIBOR plus 0.85% to LIBOR plus 2.30% on the remaining amounts. This loan was refinanced in January
2000.





145,000Sawgrass Mills Phase II mortgage loaninterest payable monthly at 6.97% through maturity in January 2001. This loan was refinanced in January 2000.





18,000Sawgrass Mills mezzanine loaninterest payable monthly at LIBOR plus 4.75% through maturity in October 2000. This loan was refinanced in January 2000.





57,000The Mills Limited Partnership $15,000 promissory noteinterest payable monthly at LIBOR plus 1.25% through its maturity in January 2000.





15,000Net Leased Properties mortgage loansprincipal and interest payments based on a 30-year amortization with maturity dates ranging from October 2010 to January 2023; weighted average interest rate of 7.7%.


104,943





F16

---

Ten Community Centers' mortgage loan with interest at 7.30%principal and interest payments through maturity in February 2009. This loan was assumed in August 2000 through the sale of the Community Centers. (See Note 3).

$


$
111,662Mainstreet Retail loanprincipal and interest payments based on a 10 year amortization with a final payment due in July 2010; interest at LIBOR plus 4.25%.


12,938


Concord Mills Residual III mortgage loaninterest only payable monthly at LIBOR plus 2.25% through maturity in December 2002.


9,043


Other notes and loans payable


20,109


16,040$
966,505

$
877,273


The
Company's weighted average interest rate at December 31, 2000 and 1999, was 8.27% and 7.38%, respectively, of which $529,740 and $661,987 was fixed rate debt at
December 31, 2000 and 1999, respectively. Of the Company's total consolidated debt, $741,505 is secured by the Company's income-producing properties.

In
connection with the refinancing of certain debt during 2000, the Company wrote off $1,513 of unamortized loan costs and paid a prepayment penalty of $1,634. In connection with the
refinancing of certain debt during 1999, the Company wrote off $337 of unamortized loan costs and paid a prepayment penalty of $2,425. In connection with refinancing of certain debt during 1998, the
Company
wrote-off $422 of unamortized loan costs. Such amounts are reflected as an extraordinary loss on debt extinguishments.

In
January 1992, in conjunction with improvements to one of the Mills, a Mills entity obtained from a bank a 10-year letter of credit in the amount of $30,249 which
serves as a credit enhancement for bonds sold by a municipality to the public. Proceeds from the bonds were used to reimburse the Mills entity for the costs of public works, which amounted to
approximately $21,000. This reimbursement was recorded as a reduction of the costs previously capitalized to the income producing property. The bonds are payable from ad valorem taxes levied by the
municipality against the assessed value of the real property owned by the Partnership and real property owned by outside parties. Funds can be drawn on the letter of credit for the purpose of repaying
principal and interest on the bonds.

Certain
mortgages, notes and loans payable agreements provide for restrictive covenants relating to the maintenance of specified financial performance ratios such as minimum net
worth, debt service coverage ratio, loan to value and restriction on future dividend and distribution payments. As of December 31, 2000, the Company was in compliance with these covenants.

F17

---

The aggregate maturities of the Company's borrowings (excluding Joint Ventures) at December 31, 2000 are as follows:

2001

$
302,6202002


107,8852003


305,7152004


8,1982005


8,308Thereafter


233,779$
966,505


In
February 2001, the Company refinanced Potomac Mills and Gurnee Mills (see Note 15). As a result of the refinancing, $271,148 of debt that had aggregate maturities
through 2003 was now $355,000 of debt with aggregate maturities due after 2005.

9.  Leasing Activities

The Company has noncancellable leases with tenants with remaining terms ranging from one to 23 years and requiring monthly payments of specified minimum
rent. A majority of the leases require reimbursement by the tenant of substantially all operating expenses of the properties. In addition, many of the leases provide for additional rental payments
based on gross revenues of the tenant in excess of specified amounts. Future minimum rental commitments under the noncancellable leases for the Mills (excluding Joint Ventures), Liberty Plaza and Net
Lease Properties at December 31, 2000 are as follows:

2001

$
93,0672002


80,5212003


71,3172004


59,5692005


48,888Thereafter


263,702$
617,064


F18

---

The
Company has a noncancellable operating lease for its corporate headquarters in Arlington, Virginia. The lease commenced in April 1996 for a term of ten years. Minimum
rental payments under this lease subsequent to December 31, 2000, are as follows:

2001

$
2,5222002


2,6542003


2,7212004


2,7882005


2,858Thereafter


1,319$
14,862


10.  Fair Value of Financial Instruments

The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company
could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.

Cash
equivalents, accounts receivable, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values.

Fixed
rate debt with an aggregate carrying value of $529,740 and $661,987 has an estimated aggregate fair value of $567,800 and $658,300 at December 31, 2000 and 1999,
respectively. Estimated fair value of fixed rate debt is based on interest rates currently available to the Company for issuance of debt with similar terms, credit risk and remaining maturities. The
estimated fair value of the Company's variable rate debt is estimated to be approximately equal to its carrying value of $436,765 and $215,286 at December 31, 2000 and 1999, respectively.

Disclosure
about fair value of financial instruments is based on pertinent information available to management at December 31, 2000 and 1999. Although management is not aware
of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since
December 31, 2000, and current estimates of fair value may differ significantly from the amounts presented herein.

Pursuant
to the requirements of its construction loan, in the fourth quarter of 2000, the Opry Mills joint venture was required to enter into an interest rate collar arrangement to
reduce its exposure to fluctuating interest rates. The notional amount of this collar ($170,000) and its termination date (September 2002) coincide with the terms of the construction loan. No
payments were made as a result of this arrangement during the year ended December 31, 2000.

The
interest rate collar described above has been designated as a cash flow hedge of the interest rate risk in the variable rate construction loan. The Company's share of the
estimated fair value of the collar on January 1, 2001 ($1,279) will be reflected as a transition adjustment in the first quarter of 2001 and reflected in other comprehensive income.

F19

---

THE MILLS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(In thousands, except share and dividend data)

11.  Employee Benefit Plans

The Company has a 401(K) defined contribution benefit plan that covers all employees who are age 21 or older and have at least 60 days of service.
Contributions made by employees electing to participate in the plan under salary reduction agreements are recorded when paid into the plan, or alternatively, accrued if unpaid. Employer contributions
are accrued and paid into the plan periodically. Employer contributions were $1,346, $1,165 and $790 for the years ended December 2000, 1999 and 1998, respectively.

12.  CAPITAL STOCK

AUTHORIZED CAPITAL

The Company's authorized capital stock consists of 150,000,000 shares of common stock, $0.01 par value, comprised of 100,000,000 shares of voting common stock
and 50,000,000 shares of non-voting common stock, and 20,000,000 shares of $0.01 par value preferred stock. No shares of preferred stock or non-voting common stock have been
issued.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

Years Ended December 31,2000

1999

1998Numerator for basic earnings per share

$
34,393

$
27,206

$
23,232Numerator for diluted earnings per share

$
34,418

$
27,283

$
23,374Denominator:Denominator for basic earnings per shareweighted average shares


23,341


23,167


23,062Unvested Restricted Stock Awardsweighted average shares


(46
)

(36
)

(51
)Denominator for basic earnings per share adjusted weighted average shares


23,295


23,131


23,011Effect of dilutive securities:Employee stock options and restricted stock awards


43


162


350Denominator for diluted earnings per share adjusted weighted average shares


23,338


23,293


23,361Basic earnings per share

$
1.48

$
1.18

$
1.01Diluted earnings per share

$
1.47

$
1.17

$
1.00


Limited
partnership units in the Operating Partnership (15,827,909 and 15,831,636 outstanding at December 31, 2000 and 1999, respectively) may be exchanged for shares of common
stock of the Company on a one-for-one basis in specified circumstances. This exchange right has not been considered in the computation of per share data as it does not have a
dilutive effect.

F20

---

MINORITY INTERESTS

Minority interests represent the interests of the unitholders in the Operating Partnership. The minority interest is adjusted at each period end to reflect the
ownership percentage at that particular time. The minority interest was 40.32%, 40.57% and 40.65% at December 31, 2000, 1999 and 1998, respectively.

STOCK OPTION PLANS

The Company has an Executive Equity Incentive Plan ("Plan") for the purpose of attracting and retaining directors, executive officers and other key personnel
for the Company, the Operating Partnership and their subsidiaries. Pursuant to the Plan, 4,500,000 shares of common stock have been reserved for issuance of stock options at a price not less than 100%
of fair market value at the date of grant and restricted stock. The options expire 10 years from the date of grant and will contain such



other terms and conditions (including, without limitation, conditions to vesting) as may be determined by the Company's Executive Compensation Committee. In 1999, the Company adopted a broad-based
1999 Stock Option Plan for the purpose of advancing the interests of the Company, the Operating Partnership and their subsidiaries. Pursuant to the plan, 2,500,000 shares of common stock have been
reserved for issuance of stock options at a price not less than 100% of fair market value at the date of grant and restricted stock. The options expire 10 years from the date of grant and will
contain such other terms and conditions (including, without limitation, conditions to vesting) as may be determined by the Company's Compensation Committee.

A
summary of the Company's stock option activity, and related information for the years ended December 31, 2000, 1999 and 1998, respectively, is as follows:

|                                                               |  | 2000  |   | 1999 |       | 1998
|-------------------------------------------------------------- |  | ----- | - | ---- | ----- | ----
|
|Outstandingbeginning of year                                  |  | 5,276 |   | $    | 21.63 |     
|Granted                                                        |  | 3     |   |      | 18.63 |     
|Exercised                                                      |  | (46   | ) |      | 17.64 |     
|Forfeited                                                      |  | (477  | ) |      | 21.47 |     
|                                                               |  |       |   |      |       |     
|Outstandingend of year                                        |  | 4,756 |   | $    | 21.61 |     
|                                                               |  |       |   |      |       |     
|Exercisable at end of year                                     |  | 1,925 |   |      | 21.59 |     
|Weighted average fair value of options granted during the year |  |       |   | $    | 1.27  |     

The
range of exercise prices of options outstanding at December 31, 2000 was $17.27 to $26.31. The weighted average remaining contractual life of options outstanding at
December 31, 2000 was 6.8 years.

Pro
forma information regarding net income and earnings per share is required by SFAS 123 which also requires that the information be determined as if the Company has accounted
for its employee

F21

---

stock options granted subsequent to December 31, 1994, under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions for 2000, 1999 and 1998, respectively: risk-free interest of 6.50%, 6.50% and 5.25%; expected life of the option of
5.50 years, 5.00 years and 4.50 years; a dividend yield of 10.0%, 10.0% and 9.0%; and volatility factors of the expected market price of the Company's common stock of .202, .215
and .210.

The
Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In
addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized
to expense over the options' vesting period. The Company's pro forma information follows:

2000

1999

1998Pro forma income before minority interest

$
56,617

$
44,430

$
37,899Pro forma net income per sharediluted

$
1.45

$
1.14

$
.97


RESTRICTED STOCK GRANTS

Pursuant to both the Executive Equity Incentive Plan and the 1999 Stock Option Plan, the Company grants restricted stock to its directors, officers and other
key employees. Vesting periods for Restricted Stock are determined by the Company's Executive Compensation Committee. As of December 31, 2000, the Company had grants of 508,572 shares of
non-vested Restricted Stock outstanding pursuant to such plans, which vest as follow:

2001

2002

2003

2004

2005116,925

106,876

96,858

84,881

54,006


An
additional 49,026 shares of stock would be issued and would vest only upon a change in control of the Company.

13.  COMMITMENTS AND CONTINGENCIES

The Company is subject to the risks inherent in the ownership and operation of commercial real estate. These include, among others, the risks normally
associated with changes in the general economic climate, trends in the retail industry, including creditworthiness of retailers, competition for retailers,
changes in tax laws, interest rate levels, the availability of financing, and potential liability under environmental and other laws.

F22

---

The Company currently is neither subject to any other material litigation nor, to management's knowledge, is any material litigation currently threatened against the Company other
than routine litigation and administrative proceedings arising in the ordinary course of business.

14.  TRANSACTIONS WITH AFFILIATES

MSC provides management, leasing, commissioned land sales, and related services to entities owned by partners of the Operating Partnership. Fees earned for the
years ended December 31, 2000, 1999 and 1998, were $258, $285 and $867, respectively.

In
addition, MSC provides development and leasing, financing and management services for Joint Ventures. Fees earned during 2000, 1999 and 1998, net of amounts eliminated, were
$16,824, $13,253 and $9,234, respectively.

The
Company is the lessor of a ground lease with the Sawgrass Mills Phase III joint venture. The lease commenced January 1, 1997 and expires on December 31, 2046. Annual
rent was $500 for 1999 and $800 for 1998, respectively. On December 30, 1999, the Company contributed the Sawgrass Phase III (The Oasis) land to the Sawgrass Mills Phase III joint venture at
cost and the ground lease was terminated.

15.  SUBSEQUENT EVENTS

MORTGAGES, NOTES AND LOANS PAYABLE

In February 2001, the Company entered into a nonrecourse mortgage loan agreement in the amount of $355,000 secured by its interest in Potomac Mills and
Gurnee Mills. The proceeds were used to repay a prior loan totaling approximately $271,148 plus a prepayment penalty of $13,350. The remaining proceeds were used to pay down the line of credit and to
fund the Company's development equity requirements. The new loan is a 30-year amortizing loan bearing interest at 7.46% with an anticipated balloon repayment in March 2011. In
addition, the Company wrote-off approximately $2,800 of loan costs.

RESTRICTED STOCK GRANTSTENDER OFFER

In November 2000, the Company commenced a tender offer to acquire all of the outstanding options with an exercise price of $23.50 or more for shares of
restricted stock. In January 2001, the Company purchased approximately 878,331 options in exchange for approximately 98,932 shares of restricted stock, which have a three-year
vesting period.

F23

---

16.  UNAUDITED QUARTERLY RESULTS OF OPERATIONS

The following is a summary of results of operations for each of the fiscal quarters during 2000 and 1999:

|                                                         |                                           | Three Months Ended |           
|-------------------------------------------------------- | ----------------------------------------- | ------------------ | ----------
|
|
|Total revenues                                           |                                           | $                  | 46,715    
|Income before extraordinary items and minority interests |                                           |                    | 10,203    
|Income before minority interests                         |                                           |                    | 8,690     
|Net income                                               |                                           |                    | 5,166     
|EARNINGS PER COMMON SHAREBASIC:                         |                                           |                    |           
|                                                         | Income before extraordinary items         |                    |           
|                                                         | Extraordinary loss on debt extinguishment |                    |           
|                                                         |                                           |                    |           
|                                                         | Net income                                |                    | $         
|                                                         |                                           |                    |           
|EARNINGS PER COMMON SHAREDILUTED:                       |                                           |                    |           
|                                                         | Income before extraordinary items         |                    |           
|                                                         | Extraordinary loss on debt extinguishment |                    |           
|                                                         |                                           |                    |           
|                                                         | Net income                                |                    | $         
|                                                         |                                           |                    |           
|Basic Common Shares                                      |                                           |                    | 23,172,940
|Diluted Common Shares                                    |                                           |                    | 23,191,770

|                                                         |                                           | Three Months Ended
|-------------------------------------------------------- | ----------------------------------------- | ------------------
|
|
|Total revenues                                           |                                           | $                 
|Income before extraordinary items and minority interests |                                           |                   
|Income before minority interests                         |                                           |                   
|Net income                                               |                                           |                   
|EARNINGS PER COMMON SHAREBASIC:                         |                                           |                   
|                                                         | Income before extraordinary items         |                   
|                                                         | Extraordinary loss on debt extinguishment |                   
|                                                         |                                           |                   
|Net income                                               |                                           | $                 
|                                                         |                                           |                   
|EARNINGS PER COMMON SHAREDILUTED:                       |                                           |                   
|                                                         | Income before extraordinary items         |                   
|                                                         | Extraordinary loss on debt extinguishment |                   
|                                                         |                                           |                   
|                                                         | Net income                                |                   
|                                                         |                                           |                   
|Basic Common Shares                                      |                                           |                   
|Diluted Common Shares                                    |                                           |                   

---

F24

---



THE MILLS CORPORATION SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION  DECEMBER 31, 2000

|                                   |  |   |         |  |   |         |  | COST
CAPITALIZED
SUBSEQUENT TO
ACQUISITION
BUILDING,
EQUIPMENT AND
LAND
IMPROVEMENTS |        | GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD |   |         |   |  
|---------------------------------- |  | - | ------- |  | - | ------- |  | ------------------------------------------------------------------------------------ | ------ | ------------------------------------------------ | - | ------- | - | -
|
|
|Mills                              |  |   |         |  |   |         |  |                                                                                      |        |                                                  |   |         |   |  
|Potomac Mills                      |  | $ | 154,670 |  | $ | 8,486   |  | $                                                                                    |       |                                                  | $ | 157,468 |   | $
|Sawgrass Mills                     |  |   | 185,000 |  |   | 13,750  |  |                                                                                      |       |                                                  |   | 171,335 |   |  
|Franklin Mills                     |  |   | 128,655 |  |   | 15,333  |  |                                                                                      |       |                                                  |   | 176,953 |   |  
|Franklin Mills Residual            |  |   |        |  |   | 4,779   |  |                                                                                      |       |                                                  |   | (4,079  | ) |  
|Gurnee Mills                       |  |   | 116,478 |  |   | 20,449  |  |                                                                                      |       |                                                  |   | 188,053 |   |  
|Hunt Club                          |  |   |        |  |   | 3,321   |  |                                                                                      |       |                                                  |   | (3,152  | ) |  
|Community Center                   |  |   |         |  |   |         |  |                                                                                      |        |                                                  |   |         |   |  
|Liberty Plaza                      |  |   | 9,669   |  |   | 9,335   |  |                                                                                      | 14,456 |                                                  |   | 8,986   |   |  
|Net Lease Properties               |  |   | 104,943 |  |   | 32,938  |  |                                                                                      | 81,054 |                                                  |   |        |   |  
|Construction in progress and       |  |   |         |  |   |         |  |                                                                                      |        |                                                  |   |         |   |  
|development pre-construction costs |  |   |        |  |   |        |  |                                                                                      |       |                                                  |   | 65,014  |   |  
|Corporate                          |  |   | 267,090 |  |   | 6,276   |  |                                                                                      | 2,769  |                                                  |   | 33,910  |   |  
|Mainstreet Retail                  |  |   |        |  |   |        |  |                                                                                      | 484    |                                                  |   | 590     |   |  
|                                   |  |   |         |  |   |         |  |                                                                                      |        |                                                  |   |         |   |  
|Totals                             |  | $ | 966,505 |  | $ | 114,667 |  | $                                                                                    | 98,763 |                                                  | $ | 795,078 |   | $
|                                   |  |   |         |  |   |         |  |                                                                                      |        |                                                  |   |         |   |  

F25

---



THE MILLS CORPORATION        NOTES TO SCHEDULE III        December 31, 2000

Property Name

LocationMILLS:Franklin Mills

Philadelphia, PAFranklin Mills  Residual

Philadelphia, PAGurnee Mills

Gurnee, ILHunt Club

Gurnee, ILPotomac Mills

Woodbridge, VASawgrass Mills

Sunrise, FLSawgrass Mills  Phase II

Sunrise, FLCOMMUNITY CENTER:Liberty Plaza

Philadelphia, PANet Lease Properties

Various


2000

1999

1998Balance at January 1

$
976,574

$
940,842

$
922,768Acquisitions


175,816


50,226


49,303Retirements/Disposed Properties


(136,359
)

(2,435
)

(18,121
)Other


(7,523
)

(12,059
)

(13,108
)Balance at December 31

$
1,008,508

$
976,574

$
940,842


2000

1999

1998Balance at January 1

$
239,484

$
214,766

$
206,357Additions charged to costs and expenses


26,598


25,130


26,504Removal of accumulated depreciation


(43,172
)

(412
)

(18,095
)Balance at December 31

$
222,910

$
239,484

$
214,766


F26

---



Building and improvements

40 yearsLand improvements

20 yearsEquipment

7 yearsTenant improvements

Lesser of life of asset or life of lease


F27

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