American Dream Mall Misses $8.8M Bond Payment
By Andrew Coen August 2, 2022 1:35 pm
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The American Dream megamall’s continued nightmare entered a new chapter Monday after it missed an interest payment due for bonds issued to finish the long-stalled New Jersey project.
The more than 3 million-square-foot retail and entertainment property in East Rutherford, N.J. did not make a required $8.8 million interest payment, according to bond documents posted Monday. The regulatory filing, which was first reported by Bloomberg, noted that the missed payment does not constitute a default on the $287 million of grant revenue bonds issued by the Wisconsin-based Public Finance Authority on behalf of the New Jersey Sports & Exposition Authority.
The owners of the destination mall, Triple Five Group, previously used debt-service reserves to pay bondholders for payments due Aug. 1, 2021 and Feb. 1, 2022, but drained the account and now only has $862.12 in it, according to the filing.
Triple Five has also so far been unsuccessful in getting necessary state documents approved to release New Jersey Economic Development Authority grants for bond payments, which is based on sales tax collections from the mall.
An American Dream spokesperson said in a statement that the bondholders are paid exclusively from sales tax generated from the project subject to state appropriation of up to 75 percent of those collected funds.
“We have no financial obligation to make any payments to the bondholders,” the spokesperson said. “We have made all necessary submissions to the NJEDA. Sales Tax revenues are being generated from the project and paid to the State and we believe the State has appropriated funds in the budget to make bondholder payments.”
The American Dream’s $1.1 billion unrated bond deal in June 2017 also included $800 million in limited obligation revenue bonds secured by payments in lieu of taxes to the borough of East Rutherford. The mall is also saddled with $1.7 billion of construction debt that Triple Five has sought to get an extension on that Triple Five was forced to put up the Mall of America as collateral for.
The development, originally called Xanadu, first broke ground in 2004 with Mills Corporation and Mack-Cali Realty at the helm before confronting a series of delays connected to the 2008 financial crisis. Triple Five took it over in 2011 and, after construction was eventually completed 15 years later with help from the municipal bond market, the mall faced new challenges after it partially re-opened in late September 2019 only to be sidelined less than six months later by the start of the COVID-19 pandemic.
American Dream lost nearly $60 million last year after incurring $273 million in losses that offset $173 million of revenue. The mall’s main attractions include a DreamWorks Water Park, Nickelodeon Universe and an indoor ski slope.
Andrew Coen can be reached at acoen@commercialobserver.com.
