Colony to Back Mills’ New Jersey Mall Project

Mills Corp., a shopping mall developer that has lost more than half its market value this year, said Tuesday that it had secured financing for its Meadowlands Xanadu project in New Jersey, clearing the way for a possible sale of the company.

Century City-based Colony Capital will provide as much as $500 million in equity financing and arrange for construction loans to fund the balance of the expected $2-billion cost of the Xanadu project, Chevy Chase, Md.-based Mills said. Mills shares jumped 15% on the announcement, which comes less than a week after New Jersey Gov. Jon Corzine said the state would try to help save Xanadu.

The 4.8-million-square-foot Xanadu project five miles from Manhattan is part of New Jersey’s effort to boost tourism and help end chronic tax-revenue shortfalls. Ending the problems at Xanadu also is crucial to Mills, which is the subject of a Securities and Exchange Commission accounting probe and has been forced to sell assets as it seeks a possible buyer.

Mills has already invested $380 million in Xanadu, its biggest project. The complex is supposed to include a luxury hotel, office buildings, fine dining and the nation’s first snow dome for indoor skiing. It is planned to be 600,000 square feet bigger than the Bloomington, Minn.-based Mall of America, the nation’s largest, which is vast enough to hold 32 Boeing 747 aircraft, according to the mall’s website.

Mills owns Ontario Mills, one of the largest malls on the West Coast.

The company’s shares rose $2.56 to close at $19.28. Their 54% decline this year compares with an increase of nearly 16% in the Bloomberg real estate investment trust index.

Colony’s properties include Raffles Hotels and Resorts, the Las Vegas and Atlantic City Hilton hotel-casinos and Resorts Atlantic City hotel and casino. Colony, run by real estate investor Tom Barrack, also is part of the investor group that is buying Kerzner International Ltd., the owner of the Atlantis casino-resort in the Bahamas.