Jones Lang LaSalle
Delays and Higher Costs Expected for Xanadu
By DAVID KOCIENIEWSKI and LAURA MANSNERUS
TRENTON, May 24 — The developer building the sprawling Xanadu shopping and entertainment complex at the Meadowlands has acknowledged that the project will take longer, cost more and earn less money than originally projected, according to documents filed with the Securities and Exchange Commission.
That disclosure — which comes as the developer, the Mills Corporation, is being pressured by lenders who want to force a sale of the company or its most important assets — rekindled fears on Wednesday that New Jersey may be spending hundreds of millions in tax dollars to provide infrastructure improvements for what could turn out to be little more than a shopping mall.
But Mills executives and state officials say that there are no plans to curtail construction of the elaborate assortment of entertainment and extreme sports facilities intended to make the complex as much of a tourist destination as a shopping center.
Mills, based in Arlington, Va., won the right to develop the coveted 104-acre site in East Rutherford by proposing an ambitious complex: retail stores surrounded by a hotel, office space and an assortment of indoor recreational facilities like a trout stream, a surfing wave and a ski slope.
Construction began in 2004, but in recent months Mills has faced an assortment of financial and legal problems, including shareholder lawsuits, an investigation by the S.E.C. and demands from creditors that the company be sold. As the price of the stock dropped — in eight months, Mills fell to below $27 a share from higher than $66 a share, closing on Wednesday at $30.70 — the company fired top executives, slashed its work force and abandoned 10 other projects.
In its filing with the S.E.C., the company said that Xanadu's opening would be delayed six months to a year beyond the recently announced date of the fall of 2007, and its cost would be higher than anticipated.
David Douglass, a spokesman for the company, said Mills remained committed to building the snow dome and other entertainment parts of the project, though the company had previously said that plans for a mile-long roller coaster and go-cart track had been abandoned.
Carl J. Goldberg, chairman of the New Jersey Sports and Exhibition Authority, said he had been assured that Mills has no intention of trying to renege on its commitment to build the more distinctive but less profitable recreational parts of Xanadu.
"There's been no conversation whatsoever that they have any intent to in any way materially change the scope of the project from the approved plan," Mr. Goldberg said.
Mills officials declined to provide an estimate of the expected cost overruns for Xanadu, which was originally projected at $1.2 billion. But Rich Moore, a financial analyst for RBC Capital, said that despite its recent problems, he upgraded his assessment of Mills because the company's record had convinced him that Xanadu would be built as planned.
The Xanadu project dates to the administration of Gov. James E. McGreevey. As part of the deal with Mills, the state promised utilities and road improvements, a new rail spur to the sports complex, tax exemptions, economic development grants and more, at a cost that could reach $1 billion.
Robert Sommer, a spokesman for the Xanadu project, said that Mills had already invested hundreds of millions of dollars, including $160 million in rent paid to the state, and intends to see it completed as planned.
Copyright 2006 The New York Times Company
Delays and Higher Costs Expected for Xanadu
By DAVID KOCIENIEWSKI and LAURA MANSNERUS
TRENTON, May 24 — The developer building the sprawling Xanadu shopping and entertainment complex at the Meadowlands has acknowledged that the project will take longer, cost more and earn less money than originally projected, according to documents filed with the Securities and Exchange Commission.
That disclosure — which comes as the developer, the Mills Corporation, is being pressured by lenders who want to force a sale of the company or its most important assets — rekindled fears on Wednesday that New Jersey may be spending hundreds of millions in tax dollars to provide infrastructure improvements for what could turn out to be little more than a shopping mall.
But Mills executives and state officials say that there are no plans to curtail construction of the elaborate assortment of entertainment and extreme sports facilities intended to make the complex as much of a tourist destination as a shopping center.
Mills, based in Arlington, Va., won the right to develop the coveted 104-acre site in East Rutherford by proposing an ambitious complex: retail stores surrounded by a hotel, office space and an assortment of indoor recreational facilities like a trout stream, a surfing wave and a ski slope.
Construction began in 2004, but in recent months Mills has faced an assortment of financial and legal problems, including shareholder lawsuits, an investigation by the S.E.C. and demands from creditors that the company be sold. As the price of the stock dropped — in eight months, Mills fell to below $27 a share from higher than $66 a share, closing on Wednesday at $30.70 — the company fired top executives, slashed its work force and abandoned 10 other projects.
In its filing with the S.E.C., the company said that Xanadu's opening would be delayed six months to a year beyond the recently announced date of the fall of 2007, and its cost would be higher than anticipated.
David Douglass, a spokesman for the company, said Mills remained committed to building the snow dome and other entertainment parts of the project, though the company had previously said that plans for a mile-long roller coaster and go-cart track had been abandoned.
Carl J. Goldberg, chairman of the New Jersey Sports and Exhibition Authority, said he had been assured that Mills has no intention of trying to renege on its commitment to build the more distinctive but less profitable recreational parts of Xanadu.
"There's been no conversation whatsoever that they have any intent to in any way materially change the scope of the project from the approved plan," Mr. Goldberg said.
Mills officials declined to provide an estimate of the expected cost overruns for Xanadu, which was originally projected at $1.2 billion. But Rich Moore, a financial analyst for RBC Capital, said that despite its recent problems, he upgraded his assessment of Mills because the company's record had convinced him that Xanadu would be built as planned.
The Xanadu project dates to the administration of Gov. James E. McGreevey. As part of the deal with Mills, the state promised utilities and road improvements, a new rail spur to the sports complex, tax exemptions, economic development grants and more, at a cost that could reach $1 billion.
Robert Sommer, a spokesman for the Xanadu project, said that Mills had already invested hundreds of millions of dollars, including $160 million in rent paid to the state, and intends to see it completed as planned.
Copyright 2006 The New York Times Company
posted by Jones Lang LaSalle NJ News Blog at 3:16 PM
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