Stalled $2 billion Xanadu entertainment complex at NJ’s Meadowlands goes to creditors

Troubled Xanadu project now in hands of creditors

NEWARK, N.J. — Creditors have taken over the $2 billion Xanadu retail and entertainment complex in New Jersey’s Meadowlands, and a spokesman for the lenders said Tuesday they were negotiating to revive and finish the stalled project.

Xanadu, which sits next to the Izod Center in the sports complex just outside New York City, was originally slated to open in late 2007.

With stores, restaurants, an indoor ski slope and the world’s tallest Ferris wheel, the five-story complex would be the largest of its kind in the nation when finished.

Construction was suspended last year after an affiliate of Lehman Brothers called Xanadu Mezz Holdings LLC failed to fund its share of the construction financing.

A spokesman for the lenders said Tuesday that the transfer grew out of an agreement between the ownership group led by California-based Colony Capital and the lenders, under which the lenders would take control of the project “if marked progress on the development was not made.”

“This action creates a strong foundation to effect the seamless transfer of ownership in order to complete this project as quickly as possible so that it is open and flourishing as an established visitor destination in advance of the 2014 Super Bowl,” spokesman Michael Beckerman said.

The lenders are talking with “several world-class entertainment and retail operators that have the financial resources” to complete the project, Beckerman said.

In a statement Tuesday through a spokeswoman, Colony and its Xanadu partners, Dune Capital and Kan Am, said it tried to save the project by giving financially distressed lenders a chance to restructure the project’s financing. But it said the lenders “ignored our proposed business plan and were unsupportive of a restructuring” that would have kept the project going.

“Because the lending syndicate would not grant an extension of our loan, they are taking control of Meadowlands Xanadu as of today and it will be up to them to determine the future of this facility,” the statement said.

Last month, Gov. Chris Christie backed the findings of a panel studying the state’s gaming, sports and entertainment industries that recommended the state commit $875 million to help finish Xanadu.

The panel also recommended selling or closing the state-owned Meadowlands Racetrack and selling the Izod Center.

Carl Goldberg, chairman of the New Jersey Sports and Exposition Authority, the agency that oversees the race track and Izod Center as well as the state’s horse racing industry, said efforts to complete the project would continue.

“The New Jersey Sports & Exposition Authority and the Governor’s Advisory Commission will continue to work with the banks as there are a number of interested parties in the property,” Goldberg said. “All interests involved wish to see the most qualified party selected to complete and open the project.”