After months of uncertainty, the New Jersey Sports Authority (NJSEA) announced on Nov. 22 that the last hurdles to the finalization of the deal that would transfer control of the $2 billion Xanadu project from the troubled Mills Corp. to a Los Angeles-based private equity firm had been overcome.
The equity firm, Colony Capital Acquisitions, announced that they had completed the deal with Mills for control of the Meadowlands retail and entertainment project on the same day.
Development deal changed to avoid default
The NJSEA unanimously voted to change Xanadu’s construction schedule, which had been slowed down due to serious financial problems within Mills. Without any change, Colony would technically been in default from the moment they formally took over the project. With these changes now in place, construction will soon be able to go forward at a faster pace, although NJSEA President George Zoffinger noted that Xanadu’s opening has now been rescheduled from late 2007 to sometime in 2008. NJSEA officials noted that Colony had obtained a $900 million construction loan in order to speed up the construction process.
The overall tone taken by the NJSEA in light of the transition from Mills to Colony as the driving force behind the Xanadu project was encapsulated by the comments of NJSEA Chairman Carl Goldberg.
“We are looking at nothing less than the reshaping of the Meadowlands Sports Complex,” he said.
Series of deals pushes project forward
Two other important announcements were made at the meeting that will help make Goldberg’s vision a reality. The NJSEA helped to broker a collaboration and consent agreement between the sports authority, the Xanadu project and the New York Giants and Jets regarding their concurrent construction projects. The agreement provides for mutual approval of their respective projects and allows for full integration for each of their land plans and traffic management programs.
“These two major projects need to be in sync,” Goldberg commented upon announcement of the agreement. “Now the ownership of these two anchor projects can work together cooperatively with a series of mutual consent and approvals.”
The two New York metropolitan area football franchises are building a joint stadium that is scheduled to be completed in Aug. 2010.
Another important component of the redevelopment of the Meadowlands sports complex areas is the construction of a New Jersey Transit Pascack valley line rail link that will bring mass transit directly to the new projects’ doorstep. The Port Authority has already approved $150 million towards construction of the link. With this figure in mind, the NJSEA announced at the Nov. 22 meeting that they had awarded a $108 million contract to Sanzari Creamer to build the 1.6-mile rail link to the sports complex.
“We received two bids for the rail line,” stated NJSEA President Zoffinger. “We went with the low bidder.”
Zoffinger later noted that while the NJSEA will need an additional $25 million to complete all aspects of the rail project, including the train station, the awarded contract would allow for construction to “begin immediately” on the rail line.
The rail line is scheduled to be completed in Feb. 2009.
Stores start to sign on
A major concern about the Xanadu project is that only a handful of tenants had signed leases for the retail and entertainment complex, one that according to the original land plan is supposed to include an indoor ski area, a minor league ballpark and many stores and restaurants. Colony has stated that it plans to follow the original plan. Several lease deals were announced following the deal closing announcement, including leases for AEG Live, operators of a 2,250-seat concert hall; Strike MX, a martini bar/bowling alley; Forever 21, a young women’s apparel store; the Children’s Place, a national children’s clothing retail chain store; Muvico movie theaters; and Cabela’s, an outdoor outfitter outlet.
Goldberg stated that obtaining tenants for the 2.2 million-square foot project is a major priority, but hinted that more are definitely on the way with the final closing of the deal with Colony.
“I would suggest that if Colony has secured $900 million in funding, then there is a significant amount of additional square footage that has already been leased, although they haven’t been announced yet,” he said. “Even in today’s environment, $900 million is real money.”
“We are looking at nothing less than the reshaping of the Meadowlands Sports Complex.” – Carl Goldberg