That’s only one development that’s raised suspicions among some observers, who are wondering why the talks leading up to the announcement were under such tight wraps.
Still, the state and Triple Five continue to move forward on finalizing the agreement and restarting construction on the troubled retail and entertainment complex.
The selection process was “much more private” than the original request-for-proposals process, which resulted in the New Jersey Sports & Exposition Authority selecting Mills Corp. in 2003 to redevelop a portion of the Meadowlands Sports Complex with the construction of its proposed Xanadu project, said Ron Simoncini, president of Axiom Holding Co., a Secaucus-based public relations firm that served as a consultant to the authority during the RFP.
The parties involved in the recent negotiations were “pretty tight-lipped,” he said.
But insiders said they had good reason to keep their negotiations quiet.
Choosing Triple Five — the Edmonton, Canada-based conglomerate that operates the Mall of America, in Minneapolis — was primarily a decision made by the lender group that took the project back from its last owner, Colony Capital, in August, although the state had to agree to the decision, said Jim Kirkos, president and CEO of the Meadowlands Regional Chamber, in Rutherford. Kirkos was a stakeholder on the original committee that selected Mills.
The lenders — all of which are major financial institutions — chose to remain anonymous throughout the negotiation process, according to one Meadowlands insider. Initially, when they were foreclosing on the property, they didn’t want the proceedings to affect their shareholders, said the insider. As discussions progressed, the parties involved shied away from public dialogue “that could be a distraction to negotiations,” the insider said. “The fewer people talking about a deal, the more likely it is to get done.”
Still, that lack of transparency has raised questions surrounding the selection of Triple Five — as has the timing of the decision, which was quietly announced the day before Christmas Eve.
The Christmas holiday was set “as an informal sort of deadline, just to be able to move this forward,” a state official close to the negotiations said. The timing of the announcement, the official added, “was just to let people know as soon as the letter of intent was signed” on Dec. 23, the same day the announcement was made.
Jon F. Hanson
Triple Five was a frontrunner throughout the process, the official said.
Real estate developer Jon F. Hanson
, head of the Christie-appointed commission that represented the state in the negotiations, said he actually had a personal deadline of Dec. 10 to sign the letter of intent, and “we were pressing to get it done by the 17th,” when he was leaving for a vacation out of state. “There was nothing formal, it’s just what my desires were.”
While those internal deadlines were missed, they still helped to get the deal done by Christmas, said Hanson, chairman of the Hampshire Cos.
In the last 24 hours of the discussions, “there was a lot of dialogue between Triple Five and the banks and ourselves,” involving finalizing the language in the letter of intent and having an initial deposit paid by Triple Five, Hanson said. “The last 24 hours is when you get a lot of details resolved.”
A major press conference likely will take place later this year, when Triple Five is expected to publicly unveil their specific plans for rebranding Xanadu, Kirkos said. He projected construction would resume on the project within the next six to eight months, with a 2013 opening.
Both the lender group and the state “did a lot of due diligence, asked us to supply a lot of information, ideas, thoughts,” said Maureen Bausch
, executive vice president of business development at Triple Five. “Nothing was unusual, it was very thorough.”
The negotiations largely focused on the bank group’s debt structure, and determining which redeveloper would give the lenders the best potential for recovering the money they had invested in the project, according to a source familiar with the discussions.
“One of the delicate issues was how much equity Triple Five had to put into it to make everybody feel comfortable that they were completely committed to completing and operating the project,” the source said.
The main reason Triple Five was chosen as the new redeveloper of Xanadu, the source added, was its success as the owner and operator of two of the largest shopping malls in North America, including the largest, Canada’s West Edmonton Mall.
The company’s biggest challenge in taking over the troubled entertainment and retail complex will be “salvaging the existing leases,” the source said. At one point, Xanadu had about 70 percent of its space leased, but the “opt-out” clauses in retail leases — which allow tenants to exit their agreements if certain leasing requirements are not met — “would suggest the validity of those leases is somewhat ambiguous.”
The hope is that Triple Five will be able to leverage the relationships they have with tenants in their other projects to get them to continue or come to Xanadu.
In next couple of months, “there will be a very concerted effort” to develop a fully executed purchase and sale agreement — a “much more intensive process” than a letter of intent, the source said. E-mail to: email@example.com