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Old Posted Jan 16, 2011, 9:26 PM
Zensteeldude Zensteeldude is offline
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Join Date: Jul 2009
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Deal Revives New Jersey's Xanadu .
DECEMBER 24, 2010.

By ELIOT BROWN And LISA FLEISHER

http://online.wsj.com/article/SB1000...549228004.html

After over two years of delays, lenders controlling the troubled Xanadu New Jersey retail development have reached a tentative agreement with Triple Five Group, the owners of the Mall of America to invest in and finish the stalled multibillion dollar project.

Should the deal be finalized, it would bring an end to a tumultuous search for a new developer to finish construction of the entertainment and retail mega-project which has become an embarrassment for the state.

Edmonton, Alberta-based Triple Five has signed a letter of intent to do the deal with a lender group which took control of the financially troubled project in August. But people involved cautioned that a deal wasn't final and could still collapse.

Bidders have estimated the 2.2-million-square-foot project needs as much as $700 million to $1 billion in new money, following the approximately $2 billion that has already been spent.

Details of the deal weren't released. But people familiar with the matter say that it calls for the lenders to receive money from the project over time as it is completed and revenue comes in, and they wouldn't receive an up-front payment. Should the project succeed, the lenders could ultimately retrieve their full investment, the people said.

The lenders, which hold about $500 million in debt, include Credit Suisse, Capmark Financial and an affiliate of Fortress Investment Group.

In a measure to aid the new developer, the typically parsimonious Christie administration has said it is open to directing tens of millions of dollars in state aid to help the project, using a pledge of future tax revenues to help finance the deal. A specific agreement on the subsidy hasn't yet been reached, multiple people involved said.

Triple Five executives said Thursday that the company envisions transforming the complex into a major tourism destination akin to the Mall of America and the West Edmonton Mall in Canada, which the firm also owns. "That location is just unbelievable," said Maureen Hooley Bausch, a vice president at Triple Five. "We have a lot of plans—we've talked to some of our favorite retailers."

The giant retail project has been a constant headache for the long list of real-estate executives and lenders involved in its creation, suffering from construction delays and rising costs, along with an economic crisis that poured cold water on bullish assumptions. The 100-acre site is slated to include a Ferris wheel and an indoor ski slope.

The initial developer, the Mills Corp., ran into financial problems and turned the project over to Colony Capital in 2007. Colony, in turn ceded control to the lender group this year.

That group, advised by Moelis & Co., along with law firm Weil, Gotshal & Manges, sought bids in recent months from real-estate firms to finish the project, negotiating in the past few weeks with Triple Five, Florida-based DeBartolo Development, and a joint venture of the Trump Organization and TPG Capital.

The project is by no means a low-risk, and many real-estate executives who looked at it are unsure that the economics will work given the tremendous further investment needed. Skeptical about the finances, Donald Trump withdrew his bid earlier this month, he said an interview Thursday. "We studied it long and hard—it is a very tough deal at any price," he said.

Triple Five, the state government—which owns the land under the complex—and the lenders plan to continue talks and hash out specifics, though hurdles remain including lining up financing. "There are conditions to be met, but I'm comfortable that they can be met," said Jon Hanson, a former state official who led a state commission that recommended a path forward on Xanadu earlier this year.

With regard to a vision for the site, Triple Five said it expected to release plans after the New Year. One thing is certain, according to Ms. Bausch: "The name has to be changed."

I also read in an article I cant find "The exterior has to be changed."
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