In most of Monday's news reports about real estate investment trust Mills Corp.'s plans to sell three malls, including Xanadu Madrid, for $980 million, the stories overlooked the ongoing problems the firm is having building its 2.3 million square feet megamall in New Jersey. The Friday before the agreement to sell the properties, Banc of America Securities analyst Ross Nussbaum issued a report suggesting the REIT should abandon the New Jersey Xanadu project, a mall so large it will host America's first indoor ski area. The firm has already sunk $380 million into the project, which is being built next to Giants Stadium in East Rutherford, and now expects its budget to balloon to $2 billion from $1.2 billion. Last week's news not only raised concerns from Banc of America, but also Ernst & Young, which is concerned the firm could succumb to bankruptcy because of the Xanadu project. However, the sale of the three properties could alleviate Ernst & Young's concerns, but there is another problem facing the Xanadu Meadowlands project. Although the National Hockey League’s Devils are expected to vacate the Continental Airlines Arena in 2008, the National Basketball Association’s Nets may not have its new Brooklyn, N.Y., arena ready in time to leave before Xanadu's expected takeover of the facility. On the positive side, Mills reportedly has signed five leases for the project.—Matthew Wurtzel
See story about financial trouble from The Record
See story about leases from The Newark Star Ledger
See story about divestitures from The Deal
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