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DreamWorks Announces Plans for Meadowlands Amusement Park


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  • 1 month later...

Source: Star-Ledger

 

Meadowlands Xanadu announces delay in planned August opening

by Ted Sherman/The Star-Ledger Saturday March 21, 2009, 8:00 AM

 

The signature outdoor store with its own waterfall and mountain stream is in hibernation. The multiplex cinema is teetering on the verge of bankruptcy. And a key lender is in default.

 

Today, the Xanadu complex in the Meadowlands -- which was selling a $2 billion fantasy experience replete with an indoor ski slope, skydiving wind tunnels, the country's tallest Ferris wheel and hundreds of retail shops -- faced the cold reality of the faltering economy.

 

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Officials said some construction is being slowed and the opening of the 2.3-million-square-foot complex along the New Jersey Turnpike in East Rutherford will again be delayed.

 

Workers at the site said they were told they were being let go, but a spokesman for the developer, Meadowlands Xanadu, said the project is not being halted -- only that it will not open as planned late this summer because of financing issues with one of its lenders.

 

"There is still ongoing construction," the spokesman, Tim White, said. "It's just at a different pace." The company is contemplating a new opening date beyond August 2009, he said, and asked contractors "to re-focus their work in line with that goal."

 

No new date has been set. The project, which has drawn criticism for its garish exterior of orange, blue and green panels that give it the appearance of stacked cargo shipping containers, is about 90 percent compete.

 

Xanadu has been having increasing trouble leasing the vast retail space it is assembling. One partner building an 18-screen movie theater in the complex is in financial default. Cabelas, the outdoor hunting and fishing outfitter and a major anchor, said earlier this month it will delay its opening until spring of 2010.

 

Xanadu officials say more than 70 percent of the shopping and entertainment complex has been rented, but many in the real estate industry say the continuing decline in the economy makes that number suspect with so many retailers across the country going out of business.

 

White said the construction schedule was changed because of a default by a non-bankrupt affiliate of Lehman Brothers known as Xanadu Mezz Holdings LLC -- which he said refused to fund its share of the construction loans. Meadowlands Xanadu said it was planning to file suit against the lender.

 

"We are taking all possible steps to get the lender to fulfill its obligations," White said. "We have opened talks with our other lenders -- all of whom are current on their funding obligations -- to resolve the issue."

 

While White said work at the site continued, some construction workers at the mega-mall site could be seen hauling away equipment and said they were told the project was being shut down.

 

Dave Schick, an employee of GAR Equipment of South Plainfield, said he was told the entire site is being shut down with the exception of electricians and sprinkler fitters. Paul Pine, another GAR worker, was sent to the Xanadu site to remove 100 construction lifts.

 

"All I know is they told us to get the stuff out," Pine said. "I was just told this morning."

 

Officials at the New Jersey Sports and Exposition Authority, which received $160 million for a 15-year lease for Xanadu, said the authority is reviewing its redevelopment agreement to see what remedies the agency may have if the project is suspended. Carl Goldberg, chairman of the authority, was also irked that the state had not been informed of the problems.

 

"It's an integral part of our vision for the future," said Goldberg, who has a meeting scheduled within 10 days with the developer. "As the landlord, I need to know when they are going to open."

 

State Senate President Richard Codey (D-Essex) was more critical.

 

"This is the icing on the cake that flopped before you could get it out of the oven," Codey said. "This would be a tremendous disappointment in any economic climate, but given the dire straits we're in now, it's a huge setback to a region that was relying heavily on the project for job creation and revenue."

 

Codey said Xanadu's project managers "need to get their heads out of the sand" and answer whether completion is even feasible at this point.

 

Xanadu was always a risky project, said James W. Hughes, dean of Rutgers University's Edward J. Bloustein School of Planning and Public Policy who studies economic trends in New Jersey. He said the project was caught between overlapping storms.

 

"Basically the fiscal crisis is still in overdrive, and Xanadu is a risky investment at a time all lenders are risk-adverse," Hughes said. At the same time, there is continuing retrenchment by consumers.

 

"Labor markets keep getting worse, home equity is declining, and 401(k) nest eggs have big cracks in them, so people are zipping up their wallets," he said. "There is not a lot of slack purchasing power out there that will flow to Xanadu. It will go to Walmart."

 

Robert Corrales, a spokesman for Gov. Jon Corzine, said many companies are faced with difficult decisions because of the national economic crisis.

 

"When Xanadu opens, it is going to be a great destination for New Jerseyans," he said.

 

But Xanadu opponent Jeff Tittel, executive director of the New Jersey chapter of the Sierra Club, called the project a disaster waiting to happen.

 

"We've given millions in incentives, tax breaks and transportation on a project that was pushed through because of political connections -- not because we needed it," he said. "Xanadu is a monument to hubris and excess. It's ugly. It's toxic. And now it's empty."

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  • 10 months later...

Source: Retail Traffic

Is Xanadu Meadowlands Not Meant to Be?

Jan 26, 2010 10:53 AM

 

Xanadu.jpg

 

Like the poetic fantasy that inspired its name, it seems the Xanadu Meadowlands retail and entertainment complex in northern New Jersey is destined to remain a pipe dream. The 2.3-million-square-foot development has been plagued by bad luck since its conception and had to halt construction last year after one of its principal lenders pulled its financing. Now, the New Jersey Governor’s office has essentially labeled the project a failure, calling for Xanadu’s current developer, Los Angeles-based Colony Capital LLC, to complete construction or turn the site over to the New Jersey Sports & Exposition Authority (NJSEA), which owns the land.

 

On Jan. 22, the office of New Jersey Governor Chris Christie made public a draft transition report by the New Jersey Gaming/Sports and Entertainment Committee which outlines a number of challenges facing Xanadu Meadowlands. Among these, the report cites a “failed leasing plan,” a “frozen” capital structure and virtual abandonment of construction activity. Much of the project’s superstructure is completed, but the site remains dormant.

 

“The Xanadu project needs both cash and tenants to complete their obligations to NJSEA. Both are missing,” the document reads. “Hence the original business model appears to have failed. The NJSEA need to engage the owners to either complete and open, or surrender the property.”

 

Some of the problems with the development have been triggered by the credit crunch—for example, Colony Capital lost a large portion of its construction financing after one of the project’s principal lenders, Xanadu Mezz Holdings, a non-bankrupt affiliate of Lehman Brothers, decided to back out of the deal. Since then, Colony and its affiliates have been shopping for an alternate lender, but have yet to secure the $500 million necessary to complete construction. But the project had been dragging even before that. It was originally slated to open in 2007 and its opening has been pushed back repeatedly. As it stands, the developers have no planned date for the project’s opening.

 

Meanwhile, some tenants that have previously committed to Xanadu have delayed opening because of the uncertainty surrounding the project. Earlier this month, Tommy Millner, CEO of hunting, fishing, camping and outdoor recreation retailer Cabela’s Inc., told investors it was highly unlikely that the chain would open its planned store at the project because of all the problems surrounding the complex. A spokesperson for Children’s Place, another Xanadu tenant, said the company had signed a 5,000-square-foot lease for the property, but would not proceed with the build-out until the future of the project had been determined.

 

“Retailers are only going to go where they need to be right now because they are facing internal budget constraints and ... there is uncertainty with what’s going to happen with that project,” says Michael Fasano, vice president and regional manager with the Elmwood Park, N.J. office of Marcus & Millichap Real Estate Investment Services. “There are two or three different dynamics happening at the same time so retailers are saying ‘We’ll sit and wait.’”

 

On the flip side, at least one large tenant that has committed to Xanadu has balked at taking an alternate location elsewhere in the area, notes Jerry Putterman, senior vice president in the Fairfield, N.J. office of real estate services firm Grubb & Ellis. If the complex ever opens, that tenant would clearly prefer to be at Xanadu, he says.

 

According to the report from the New Jersey Governor’s office, most of the major tenants at the development have an escape clause built into their leases that would allow them to pull out of the project if leasing remains below a certain level.

 

More troubling still, Xanadu’s chances of securing enough financing to finish construction remain low, according to William Procida, president of William Procida Inc., a Fort Lee, N.J.-based provider of management and capital services for real estate companies. “The project was very aggressive to begin with, but the capital markets being what they are, you combine it with losing tenants, and it doesn’t look good,” Procida says. “They are lucky the government has been so patient with them.”

 

In Jerry Putterman’s view, the project might have a better chance of securing a large equity commitment in place of a loan.

 

The Xanadu development was ill-conceived from the beginning, notes Procida—he thinks the plan put forward by Hartz Mountain Industries back when the NJSEA was looking at development proposals in 2002 and 2003 would have a better chance of succeeding. Back then, Hartz Mountain and partner Forest City Ratner Cos. presented an $815 million proposal to the NJSEA, which combined a convention center, several hotels and office buildings with a few stores and an indoor racing center. During the selection process, Hartz Mountain criticized Xanadu’s original developer, the Mills Corp., for misrepresenting what it deemed to be essentially another enclosed mall as an entertainment complex.

 

“We have plenty of shopping centers in New Jersey,” Procida notes. “They were trying to make the shopping center of all shopping centers, and while it’s a highly visible spot, the egress is not the greatest. Everything is going against them—people are not spending, banks aren’t lending, and they are already burdened with debt in excess of what it’s worth.”

 

A spokesman for Governor Christie’s office said the state’s Sports and Entertainment Committee was still in the process of determining its recommendations for the project. Both Colony Capital and NJSEA declined to comment directly, referring inquiries to an outside public relations representative who did not returns calls.

 

–Elaine Misonzhnik

 

 

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Xanadu may get different name if $500M funding deal is set, report says

By The Star-Ledger Continuous News Desk

February 02, 2010, 6:53AM

 

EAST RUTHERFORD -- The stalled Xanadu project here may get a different name and different look if its owners can secure $500 million in construction funding from Billionaire Stephen Ross, according to a report in NorthJersey.com.

 

The report said Ross's Related Companies real estate firm is in negotiations with Xanadu developer Colony Capital. The talks are aimed at getting the $2 billion retail project set for an opening late this year.

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  • 11 months later...
Mall of America owner takes over Xanadu

Thursday, December 30, 2010

Last updated: Thursday December 30, 2010, 1:21 AM

BY MICHAEL LAMENDOLA

South BergeniteMANAGING EDITOR

 

The stalled Meadowlands Xanadu project will soon have its third owner. Triple Five, the developer of the largest mall in North America, the West Edmonton Mall in Canada, and the largest in the United States, the Mall of America in Minnesota, signed a letter of intent on Dec. 23 with the Lender Group, a consortium of five financing groups that hold ownership in the Xanadu project, to take over the beleaguered retail and entertainment complex that is three years past its originally targeted opening date.

 

"This decision is a significant step forward in the realization of this project as a world-class entertainment and retail facility, and the Lender Group looks forward to finalizing a transaction with Triple Five and working with them to deliver on the original promise of the development as a premier visitor destination and significant economic catalyst for New Jersey," said Michael Beckerman, a spokesman for the Lender Group.

 

The Lender Group, which consists of creditors such as Credit Suisse and Capmark Financial Group, froze a $521 million loan package in 2009 and gave former owner, Colony Capital, until March 31 this year to raise an additional $600 million in capital to meet obligations. Colony was unable to do so and in August, Colony ceded the deed to the property to the lending consortium. Since, Governor Chris Christie has made it a priority to get a new operator in place by the end of 2010.

 

"I promised the people of Bergen County and the State of New Jersey that action would be taken to revitalize the complex at the Meadowlands and today I am delivering on that promise," said Christie in a statement last week. "This administration fully supports the progress being made and will be a true partner at every step in transforming the Meadowlands from a financial and economic drain into a vibrant destination so that New Jerseyans can begin to reap the benefits of the job creation and much-needed tax revenues."

 

Triple Five will be the third owner/operator of the massive 2.3 million square foot retail and entertainment complex, which has sat dormant since early 2009, nearly complete on the outside, but in need of extensive interior finishing. Mills Corp., a Virginia-based real estate investment company, was chosen as the original developer in 2003, but was replaced by Colony in 2006 after it went out of business and was purchased by Simon Property Group. The project, with attractions such as a massive indoor ski slope, fashion wing and mutli-screen Muvico movie theater, was targeted to originally open in 2007, but delays and financing issues continuously pushed that date back. State officials are now hoping for an opening by 2014, when the Super Bowl comes to the Meadowlands.

 

"Building on the proven success of West Edmonton Mall and Mall of America, we are confident that Triple Five will transform the Meadowlands project into a world-class tourist destination," said Paul Ghermezian, senior vice president of Triple Five. "We have monitored the project since its inception and are uniquely positioned to complete the project and operate it successfully."

 

Triple Five said it attracts 60 million visitors annually to its two major malls, West Edmonton and Mall of America, of which half drive 150 miles or more to visit the attractions. Mall of America boasts over 500 shops and the nation's largest amusement park. West Edmonton Mall boasts the world's largest amusement park, world's largest indoor-triple loop roller coaster and world's largest indoor wave pool. Details of what direction Xanadu will be heading under new ownership will be released in early 2011, but state officials have said a new operator would be held to redesigning the multi-colored exterior façade that has been criticized for years.

 

Jim Kirkos, president of the Meadowlands Regional Chamber of Commerce and Meadowlands Liberty Convention and Visitors Bureau, said that Triple Five's takeover of the project is the first step in reinventing the entire Meadowlands Sports Complex in a way that will be an economic boon for the region.

 

"As a destination, we know people will come to the Meadowlands to spend fresh dollars because of Xanadu, and its purchase by Triple Five is a critical step in clearing the way for gaming and other destination options at the site," said Kirkos. "The Meadowlands Sports Complex has no excuse except to be the number one multi-venue entertainment and sports district in the world, and we will continue our work to support its reinvention."

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  • 1 year later...

New update from the Meadowlands project, now with Dreamworks

 

From the New York Times:

 

DreamWorks Animation Announces Plans for Meadowlands Amusement Park

By CHARLES V. BAGLI

 

The Hollywood studio DreamWorks Animation has struck a deal to bring Shrek, Kung Fu Panda and other animated movie characters to a planned amusement park as part of a revived entertainment and retail mall in the New Jersey Meadowlands.

 

It would be the first theme park based on the studio's animated movies since DreamWorks's earlier plans for parks in China, Abu Dhabi and Dubai failed to work out. DreamWorks has sought to capitalize on the huge popularity of its films, much as Disney and Universal Studios have in the United States, Europe and Asia. The indoor theme park would include rides, attractions and a glass-enclosed wave pool incorporating characters from the studio's movies.

 

The partnership between the developer, Triple Five, and DreamWorks is a rare bit of good news for a site that has sat vacant and unfinished since May 2009, when the previous developers ran out of money after spending $1.9 billion on a five-story complex just west of Manhattan, near MetLife Stadium, called Xanadu.

 

In a statement Tuesday evening, Jeffrey Katzenberg, chief executive of DreamWorks Animation, confirmed the deal, saying the theme park would involve the studio's "characters, storytelling and technology in a unique and innovative family entertainment experience."

 

Triple Five, the developer of the Mall of America, has renamed the project American Dream and drawn up plans to make it even bigger, with nearly 1.7 million square feet of retail space, an indoor ski hill, indoor sky diving, bowling, an aquarium, a live theater and the 14.7-acre amusement park.

 

But the project continues to be dogged by delays. In announcing a tentative agreement between the current owners and Triple Five in May 2011, Gov. Chris Christie said he expected the developer to strike a deal with the owners and get financing for the project by the end of 2011 so that American Dream could be open for the 2014 Super Bowl at MetLife Stadium. But executives working with Triple Five now say that $1.75 billion in financing will not be completed until October and that the complex will not open until September 2014, seven months after the Super Bowl.

 

Triple Five, which is owned by the Ghermezian family, has built two of the world's largest and most successful entertainment malls. But the company faces special challenges in the Meadowlands, the least of which are the local blue laws that prohibit retail activity on Sundays.

 

Many retailers say they are reluctant to get involved with the project because of its troubled history. "There were enough false starts that retailers want to see some substance," said Ron DeLuca, a partner at R. J. Brunelli & Company, which represents a roster of retailers who had signed leases at Xanadu. "Until American Dream becomes a reality," he said, "it is difficult to get retailers to make hard commitments."

 

The Jets and Giants, which both use MetLife Stadium, filed a lawsuit last month seeking to block construction of the project, saying it threatens to "clog the complex's already congested transportation networks" on game days, when 80,000 fans converge on the stadium.

 

The State Transportation Department approved the project, however, and Triple Five moved on Tuesday to dismiss the suit.

 

The deal with DreamWorks provides the project with some Hollywood cachet and underscores Triple Five's emphasis on entertainment.

 

Entertainment conglomerates like DreamWorks say they view theme parks as a way to expand revenues for an industry buffeted by piracy, flagging DVD sales and a drop in network television viewers.

 

The theme park industry is slow growing in North America, said John Robinett, senior vice president of economics for the Themed Entertainment Association, although the recent creation of the Wizarding World of Harry Potter attraction at Universal Studios in Florida and a $1 billion makeover tied to "Cars" characters at Disney's California Adventure park in Los Angeles have raised attendance substantially.

 

Triple Five is hoping DreamWorks can do the same in the Meadowlands, where it says it hopes to attract 55 million visitors annually. But that may be easier in Minnesota or West Edmonton, Canada, where Triple Five already operates.

 

 

"Not only does northern New Jersey not lack for shopping malls; there are a lot of destination attractions," said David L. Malmouth, a developer in San Diego and a former Disney executive. "Manhattan is a pretty compelling theme park in its own right."

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