Retail REIT Mills Corp. (NYSE: MLS) has lined up a money partner to rescue its Meadowlands Xanadu development in Northern New Jersey. Under a letter of intent announced Aug. 22, Colony Capital Acquisitions LLC will provide up to $500 million in equity and arrange construction financing to complete the $2 billion sports, leisure and shopping project.

Expected to close on or before Sept. 21, the deal will introduce Los Angeles-based private investment firm Colony Capital into Mills’ joint venture with Kan Am, a private real estate investment group based in Germany. Once the deal closes, Mills will be free of any further financial obligations associated with the project, according to Chevy Chase, Md.-based Mills.

As consideration, Mills would issue either 4.5 million shares of its common stock or 4.5 million units of The Mills Limited Partnership, redeemable for the same number of shares of The Mills common stock. Under the agreement, Mills would become a limited partner in the project, with a contributing partner account of approximately $485 million.

Kan Am’s current partner capital account is $342 million. Mack-Cali Realty Corp. is also invested in the project through a separate partnership. Colony and Kan Am would be entitled to preferred returns on their capital. It is unlikely that Mills will be able to recoup any of its invested capital prior to the project’s completion, according to a Mills press release.

Earlier this month, Mills announced it has agreed to sell property stakes worth $981 million, including its interests in Vaughn Mills, a Canadian mall, plus the St. Enoch Centre in Scotland and Spain's Madrid Xanadu retail complex. Ivanhoe Cambridge will buy the interests from Mills. Mills will reportedly use the proceeds to pay down a portion of its senior term loan with Goldman Sachs Mortgage Company (GS).