Jones Lang LaSalle


Xanadu opening delayed 6 months
Thursday, April 20, 2006

By PRASHANT GOPAL
STAFF WRITER
The Meadowlands Xanadu entertainment and retail complex probab;y won't open until mid-2008, about six months behind schedule, the chairman of the New Jersey Sports and Exposition Authority said Wednesday.

The delay comes because developer Mills Corp. is redesigning portions of the $1.2 billion project at the request of two likely tenants, authority Chairman Carl Goldberg said after a two-hour meeting with Mills' new chief operating officer, Mark Ordan.

The authority is the project's landlord and has been concerned about the financial struggles of Mills, which has been rocked in recent months by financial restatements, an ongoing Securities and Exchange investigation and executive layoffs.

Mills, which began construction on the Meadowlands project last spring and hoped to open for the Christmas 2007 shopping season, has backed away from projects elsewhere in the country, but Goldberg said after Wednesday's meeting that the developer offered a reasonable explanation for delays here.

The redesign includes changes to a building that is expected to be occupied by Wannado City, a 100,000-square-foot children's role-playing facility, and suggests that Mills is close to making a deal with another major tenant, who has not yet been disclosed to the public, Goldberg said.

"If Mills has the confidence level to be fabricating and pouring concrete according to the specifications of these tenants, it suggests a fairly high degree of confidence," Goldberg said.

So far only four tenants -- including a Muvico movie theater and the Cabela's outdoors and fishing store -- have been announced as signing leases.

Goldberg said the company didn't show him any new signed leases at the meeting, but he saw unfinished leases for more than a dozen prospective tenants. The company said it expects to get aggressive about signing up tenants at the International Council of Shopping Centers conference in Las Vegas next month.

"Mills will have a full complement of leasing agents working there with the focus on Xanadu," said Xanadu spokesman Bob Sommer on Wednesday night.

Goldberg said that during the meeting Ordan reassured him and authority President George Zoffinger that Mills will be able to pay for the project's construction, at least through the end of the year.

Some Wall Street analysts expect Mills -- or at least some of its malls -- to be sold to another company by then, which would likely bring fresh financing to the Meadowlands project.

Mills announced in February that it is seeking "strategic alternatives.''

On April 12, Mills said that its lenders agreed not to default on their loans even though the company's 2005 annual report has yet to be filed because of accounting mistakes.

The company also managed to free up nearly $250 million by arranging for a $625 million mortgage for its Sawgrass Mills mall in Florida.

The new bank waivers and loan agreements include restrictions that suggest a sale of the company is a priority, analysts say.

Goldberg said he's not concerned that more leases haven't been signed because it's still relatively early in the process.

"I think the most important leasing period is from now to the early fall," Goldberg said. "By early fall, we should have a clear understanding of who wants to be in the facility and if it's fitting together."