$8.8m Bond Payment Delay Down To State Says American Dream Owner

American Dream would like to be talking about how it acquired the neighbouring 30-acre site to its East Rutherford, NJ. home to eventually bring the complex to a total of 120 acres.

It would like to talk about the opening of an Apple store on Dec. 3 last year, plus its large Gucci and Saks 5^th Avenue stores, or the reopening of its Big Snow indoor ski slope, months after a major fire forced it to shut down.

But right now American Dream is struggling to catch a break.

Owned and operated by Canadian development and finance corporation Triple Five, which also established the West Edmonton Mall in Alberta in 1981 and Mall of America in Minnesota, which opened in 1992, American Dream Mall Municipal bonds tied to American Dream, missed an $8.8 million semi-annual debt service payment due Feb. 1.

The bonds backing the $5 billion East Rutherford complex have failed to pay the interest due on approximately $290 million for the development, according to a regulatory filing.

Last year a reserve account was drawn upon to cover previous debt service payments, but that has a remaining balance of just $878.50 dubbed — in what is probably best described as legal understatement — as “insufficient funds” to cover the latest amount due, according to U.S. Bank National Association, a bond trustee.

So once again Triple Five needs to polish up its American Dream.

American Dream Points To State

Canadian mall developer Triple Five owns the 3.5 million sq. ft. American Dream mega-mall, which has endured a chequered history after passing through several ownerships before it was finally delivered in late 2019, only for the pandemic to force all malls to shut their doors.

In a statement American Dream made it clear that it was not the responsible party for making the payment to the trustee for the bonds backed by grants from the New Jersey Economic Development Authority, or to fund the reserve.

Instead, the mall owner said debt service payments are made by the state, following a review and certification process, to the bond trustee and distributed to bondholders, which is not yet complete. Last year, American Dream also insisted it was not responsible for the debt service payments.

The notice from U.S. Bank “was to advise that sales tax revenues have not yet been received and was not a notice of default…American Dream and its tenants, like all other businesses in the state, have been making sales tax payments, which are the source of revenue to make the grant payments to the bond trustee,” the statement said.

Long History at Meadowlands

It has since sought to establish itself as a one-of-a-kind retail and leisure extravaganza, complete with an indoor amusement park, indoor water park, aquarium, ski dome, observation wheel and ice skating rink.

And in November past, American Dream earned itself a four-year reprieve from a key lending group led by JPMorgan ChaseJPM
, when it extended the term for $1.7 billion owed in construction financing. That debt will now mature in October 2026.

But that came at a price. The lenders also took a stake in Triple Five’s Mall of America in Minnesota, 49% of which had been offered up as collateral on American Dream’s debt.

Overall, bondholders and banks lent Triple Five roughly $2.7 billion and in addition to the funds from private lenders, the project has the aforementioned $290 million of municipal bonds supported by sales tax receipts, plus $800 million of municipal debt backed by payments in lieu of taxes, which is senior to the construction loans.

Filings show that the mall lost $61 million in 2021, but ahead of its 2022 financials it has signed a slew of tenants across both retail, entertainment and dining.

“At its core, American Dream is the culmination of over 40 years of mixing leisure and retail which started for us in West Edmonton,” American Dream principal Paul Ghermezian said of the concept.

With figures from industry bodies ICSC and the National Retail Federation suggesting that shoppers have been returning to malls across the U.S., Triple Five will be hoping for an uplift in fortunes for what might yet prove America’s last mega mall project.

That, at least, must be the dream.