Can Do Xanadu
The road to paradise isn’t always a smooth one, but it looks as if Xanadu, the 4.8-million-square-foot retail and entertainment complex in the New Jersey Meadowlands, will indeed be completed by 2008.
Lead developer Mills Corp. of Maryland faced harsh criticism in recent months from the Securities and Exchange Commission, financial analysts and New Jersey legislators as construction costs rose to about $2 billion, $800 million more than previously expected. The announcement was followed by a significant drop in the company’s stock price.
The corporation also faced criticism for failing to produce the leases it had promised to investors. The Newark Star-Ledger reported August 13th that Mills was expected to announce deals with Lucky Strike Lanes, Landry’s Aquarium Restaurants, Wannado City and an
But a newly struck deal between Mills Corp. and California’s Colony Capital Acquisitions will pump as much as $500 million into the development, secure a loan to pay the balance of the $2 billion construction costs and relieve Mills Corp. of its majority stake in the project, The Record reported.
Mills will now commit to investing $485 million into Xanadu, most of which has already been spent, and will have no further financial obligations following approval by Mills lender Goldman Sachs to close off the deal.
Carl Goldberg, chairman of the New Jersey Sports and Exposition Authority, said Colony’s involvement will revive interest in Xanadu.
“This creates a new sense of excitement for prospective tenants who now know, without ambiguity, that the project will be completed,” he told The Record. “Colony is an extraordinarily capable real estate investor.”
The deal will anchor the proposed indoor snow dome and minor league baseball park, and “enough other entertainment components to live up to the terms of the developer’s agreement,” he said.
The announcement comes amid a disappointing year for the company. Mills Corp. began explorations into a company sale after an accounting scandal this spring. The New York Times reported Mills lost 70 percent of its value since September of last year and dismissed about 220 employees, including the company’s chief operating officer and director of development.