The signing had been expected--Mills and Mack-Cali won the redevelopment project in a competitive bidding process earlier this year, beating out finalists Hartz Mountain Industries and Westfield. One possible hitch is that legal action over the selection process, initiated by Hartz, is still pending.

Unlike the other finalists, the Mills/Mack-Cali project will retain the Continental Airlines Arena, home to the NBA Nets and NHL Devils, at least for now. The development partners say they are keeping their options open on the 20,000-seat venue, and its ultimate fate could rest with the possible sale and/or relocation of the two teams, as well as a potential replacement arena in downtown Newark (see earlier stories).

In any case, Meadowlands Xanadu will add plenty of entertainment to the site. Mills is responsible for the "fun" part of the project, including the country's first indoor Alpine ski resort, plus an indoor Formula One racing venue, a minor league baseball stadium, an extreme sports park and a variety of other family entertainment uses. A retail component is also part of the mix.

"Meadowlands Xanadu will set a new standard for bringing lifestyle, recreation, sports and family entertainment together in one place," says Laurence Siegel, Mills' chairman/CEO. "We are excited to create this destination."

Kan Am, a Munich, Germany-based investment advisory company has bought into the project as Mills' investment partner. Details of the participation have not been disclosed. Kan Am's US president, James Braithwaite, however, calls the project "a great investment opportunity."

Mack-Cali's piece of the pie is the business side of it--the company will develop the 2.2 million-sf office/hotel component, which will consist of four, 14-story class A office buildings of 440,000 sf each, and a 520-room hotel with conference facilities.

"We're confident that the office space and hotel and conference center that we will build at Xanadu will attract top-tier businesses to the Meadowlands," says Mitchell E. Hersh, Mack-Cali's CEO. "It will benefit both the complex and the Northern New Jersey region."

As part of the development agreement with the NJSEA, Mills/Mack-Cali will pay the authority a development rights fee of $160 million once construction starts. The deal also calls for the developers to pay $65 million for highway improvements and another $25 million for restoring adjacent wetlands, according to sources.

Mills and Mack-Cali officials say they will start construction once all approvals and permits are in place, pending any further legal action. The two companies say they can have the project done by late 2005, although observers consider that date ambitious.

Instant Insights /

Done Deal: Development Agreement Signed for $1B Xanadu

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