New York City Xanadu, the controversial, long-delayed retail and entertainment complex in New Jersey’s Meadowlands Sports Complex, “appears to be a failed business model,” according to a gaming, sports and entertainment report released Friday by the transition team of the state’s new governor, Chris Christie, The Record reported. Consequently, New Jersey needs to tell the owners to “open or surrender the property,” the report said.
The report found that “there is no leasing plan making material on-site progress regarding Xanadu, and that the physical activities of construction are at a standstill, if not abandonment. It said the construction loan is out of balance, and there are no monies readily available to finish construction of public areas or tenant improvements. Most, if not all, of announced major tenants have an “escape clause” solely dependent on leasing -- or lack thereof.
The report also bluntly criticizes the lack of a specific deadline in the 2003 developer’s agreement by which Xanadu would have to open or be in default.
“The prevailing business conclusion at the time of the negotiation of the Meadowlands Xanadu project documents was that, once constructed, the developer’s investment return and debt service requirements would compel the prompt opening and continuous operation” of the entertainment and retail center, the report said before adding, “Unbelievable!”
Peter Fair, the COO of Xanadu, responded in a statement in the newspaper account: “The Xanadu business model is sound,” Fair said. “The project is delayed because two of our lenders went bankrupt. We are in the market procuring an alternative source of financing.”