Los Angeles-based private equity real estate firm Colony Capital will pour $500 million (€392 million) into Xanadu, a monolithic New Jersey entertainment and shopping complex, whose future has been considered less than certain by Wall Street and state officials alike.
Maryland-based shopping mall developer Mills Corp. broke ground on the first phase of the project, which lies only a few miles from Manhattan, last year. Part of the Meadowlands, an entertainment complex in New Jersey which contains sports stadiums and the Meadowlands Race Track, the site’s Continental Airlines Arena is currently home to two professional sports teams: the New Jersey Nets of the National Baskeball Association and the New Jersey Devils of the National Hockey League. Both teams are expected to move eventually to new sites.
The redevelopment plans envision 4.8 million square feet of entertainment, retail, office and hotel space including a minor league baseball park, an indoor ski facility, a large movie complex, and a children’s entertainment village in addition to shops and restaurants. Xanadu would be bigger than other mega-projects, including Minnesota’s Mall of America.
Mills has reportedly invested at least $380 million in Xanadu so far, and is expected to pump another $90 million into the project once the deal with Colony is finalized, which is expected in December. However, state officials remain wary with New Jersey Governor Jon Corzine describing the deal as heavy on contingencies at a recent news conference.
Originally slated to cost $1.2 billion, the project is now expected to run at least $2 billion. As part of the deal, Mills would agree to become a limited partner in the project and Colony would arrange financing for the rest of the $2 billion project in addition to its equity contribution.
Colony, which has invested in more than $15.6 billion in assets since its 1991 inception, owns the Raffles Hotel Group, as well as hotels and casinos in Las Vegas and Atlantic City.