Xanadu Back On Track

The massive Xanadu shopping and entertainment complex on the site of New Jersey’s Meadowlands Sports Complex is back on track thanks to a deal that would transfer control of the $2 billion project to a Los Angeles-based private equity firm.

Colony Capital Acquisitions announced November 22nd that it completed the deal with the troubled Mills Corp. to recapitalize the project, which has already suffered delays because of Mills’ serious financial problems.

The 104-acre project will be incorporated into the Meadowlands Sports Complex in East Rutherford, currently the home of Continental Airlines Arena, Giants Stadium, and Meadowlands Racetrack.

The arena site will be scaled down to accommodate more parking, and the New York Jets and Giants NFL teams have agreed to partner on construction of a new stadium on the site.

Xanadu will include a 2,250-seat concert hall to be operated by AEG Live. The complex will also sport a hotel, restaurants, office buildings, shopping and the first domed ski slope to be built in the U.S.

Colony will contribute the largest share of the $1.5 billion additional financing needed to complete Xanadu, including $500 million in equity and approximately $1 billion in debt and additional capital, according to a statement announcing the agreement.

Colony agreed in August to invest $500 million in the project and arrange for financing for the rest of the construction. The completion of the agreement ends Mills’ obligations to Xanadu, already delayed by a year. Mills, a Chevy Chase, Md.-based developer, has lost more than half its market value this year, according to Bloomberg News.

Originally scheduled to open in 2007, Meadowlands Xanadu is now shooting for a 2008 debut.

“We are pleased to have the complex negotiations of the last few months behind us and are extremely excited about the project’s momentum,” Colony Capital President Richard Saltzman said in a statement.

“The financing, major tenants and long-term vision are now in place to make Meadowlands Xanadu the entertainment destination of choice for millions of residents in the tri-state region.”

George Zoffinger, President and CEO of the New Jersey Sports and Exposition Authority, added, “We look forward to working in partnership with Colony and the other members of the venture toward the successful completion of a fantastic project.”