Time ran out on Tuesday for Meadowlands Xanadu, the 4.8-million-square-foot, $2 billion retail and entertainment complex that has suffered from cost overruns, construction delays, work stoppages and disputes with state and local officials and the New Jersey Sports Authority.
Meadowlands Xanadu’s sponsor group, which consists of Colony Capital, Dune Capital and KanAm, said after months of attempted negotiations with its lending syndicate to find ways to restructure the financing, lenders were “unwilling to pursue alternative solutions to move the project forward.” The project is now controlled by the lenders.
The five lenders that now control Xanadu — and include Credit Suisse Group AG, Capmark Financial Group and Fortress Investment Group LLC — had reportedly given the Colony-led sponsor group until Monday to raise additional equity.
“Because the lending syndicate would not grant an extension of our loan, they are taking control of Meadowlands Xanadu as of today [Tuesday], and it will be up to them to determine the future of this facility,” the sponsor group said.
The project sits half-finished, an eyesore and source of embarrassment, near the new Meadowlands Stadium, site of the 2014 Super Bowl.
Xanadu has been besieged by problems almost since its inception. The Colony-led sponsors took over development from Mills Corp. in 2006 after that developer ran out of money. Lehman Brothers Holdings Inc., which provided financing for the project, filed for bankruptcy in September 2008. Construction was suspended in March 2009 after a Lehman affiliate defaulted.
“In an effort to save the project, we agreed to allow the lenders to terminate their initial loan obligations in exchange for pursuing good-faith efforts to restructure the project’s financing,” the sponsor group said. In the interim, the sponsor group said it approached The Related Companies and worked with the State of New Jersey to develop a viable long-term business plan. At the same time, a special governor’s commission was reportedly talking to Triple Five Group, which owns and operates the Mall of America in Minnesota and the West Edmonton Mall in Edmonton, as well as Related.
Triple Five executives could not be reached for comment. Related declined to comment.
The lending group now in control of Xanadu said it is negotiating with entertainment and retail firms with the financial wherewithal, leasing and development expertise to complete the project. However, the viability of Xanadu’s concept, which included an indoor ski slope, a Formula 1 racetrack and the tallest Ferris wheel in the country, along with hundreds of retailers, has always been in question.