New Jersey’s American Dream Mall Sees Value Plummet by $800M

It’s been a bumpy ride for New Jersey’s American Dream mall since it opened in 2019, and not because of its five roller coasters — and it keeps getting bumpier.

Triple Five Group’s 3.5 million-square-foot American Dream megamall in East Rutherford, N.J., has seen its value drop by $800 million, according to a revised tax bill posted Tuesday by the Municipal Securities Rulemaking Board.

The massive entertainment complex, which features an amusement park, a water park and a ski slope along with a shopping mall, had an assessed value of $2.5 billion for the quarter ending June 30, a 24 percent drop from its previous estimated value of $3.3 billion, the tax bill shows.

Spokespeople for American Dream and Triple Five did not immediately respond to requests for comment. Bloomberg first reported the news.

To complete financing for the $5 billion megamall, Triple Five had borrowed about $1.1 billion in tax-exempt municipal bonds, as Commercial Observer previously reported.

Roughly $800 million of the debt issued to finance American Dream is backed by payment in lieu of taxes (PILOT) payments, which are equivalent to 90 percent of the mall’s estimated property tax, Bloomberg reported.

With its current $2.5 billion assessment, the mall’s annual PILOT payment will now be around $36.5 million. Since the mall uses that to help cover its full debt service payment, it will need to draw more from its roughly $38 million in reserves to foot the bill, according to a bond filing. Its next $27 million semi-annual interest payment is due June 1.

If the principal payments are not paid off, the maturity of the bonds will be extended until they’re paid in full or until Dec. 1, 2056, Bloomberg reported.

News of the mall’s drop in value comes after American Dream’s municipal bonds tied to its financing missed an interest payment in February, as CO previously reported.

The bonds, backed by the New Jersey Economic Development Authority and tied to sales tax collection at the mall, accounted for $287 million of the $1.1 billion in debt tied to financing of the mall, CO reported.

But it wasn’t American Dream’s first financial troubles. The mall was hit with a series of obstacles after opening in 2019, including $3 billion in debt after missed bond payments, accidents and fires, losses of $245 million and a global pandemic that forced it to temporarily shut down.

Isabelle Durso can be reached at idurso@commercialobserver.com.