Edited by: TJVNews.com
The American Dream Mall, a 3.5 million-square-foot shopping and entertainment complex in the Meadowlands Sports Complex in East Rutherford is going through some rough financial times due to the economic downturn created by the Covid virus.
On Tuesday, the Wall Street Journal reported that the New Jersey mall which is the most expensive U.S. shopping center ever built, is behind on its bills.
The WSJ reported that its owner, Canadian mall operator Triple Five Group, failed to make a quarterly $125,000 payment that was due on August 1st to East Rutherford, N.J., according to the town’s mayor. It is the second time the developer has been late on the payment-in-lieu-of-taxes.
Having opened in 2019 at a hefty tab of $6 billion, American Dream was the first mall in the U.S. to devote more space to entertainment, restaurants and theme-park rides than to traditional retail, according to the WSJ report. It was part of an ambitious effort to lure younger shoppers away from their screens and to the complex, the report indicated. Its nearly 90-acre site includes a 16-story indoor ski hill, a roller coaster, as well as a water park with a steep slide that rises 14 stories high.
In July of this year, Crain’s NY reported that the state has yet to approve a necessary document which would enable the funds to be released. If the state’s Economic Development Authority fails to approve documents certifying project expenditures by the developer, Triple Five Group, bondholders would risk not getting their money.
The mall won’t get aid to make debt payments if the paperwork doesn’t go through. EDA needs to approve the mall’s cost statement to keep the ball rolling, said Virginia Pellerin, an agency spokeswoman. Six months ago, in January, the bond servicer had criticized American Dream mall saying it had not yet filed the paperwork, now as the deadline draws closer, the ball is in EDA’s court.
On July 1, New Jersey’s $50.6 billion budget began for the new fiscal year. As per Crain’s, it earmarked roughly $87 million for the Economic Redevelopment and Growth Grant program. Pellerin declined to share why American Dream’s cost statement had not yet been approved, or if the new budget set aside any grant money for the mall.
Failure to make a payment on the ‘grant revenue bonds’ would not constitute as a default, nor would it force the borrower to pay the loan back immediately, as per the bond documents. Melissa Howard, a spokeswoman for American Dream, declined to comment. Nuveen LLC, the biggest bond holder, with about $108 million as of April 30, didn’t respond to Crain’s request for comment.
American Dream, which boasts an indoor waterpark, amusement park and ski slope, qualified for the grants because the location is designated as an economic redevelopment area. The grants, for up to 75 percent of the incremental sales-tax revenue collected annually, are capped at $390 million for a 20-year period.
American Dream was criticized by bond holders for not having filed the project-cost paperwork earlier with the state. The company hired an auditor to fill out the cost statement in March 2021, but they still had not submitted it to the state as of January, as per a letter from bond servicer Trimont Real Estate Advisors.
“While everyone appreciates the difficulties posed by the pandemic, and the likelihood that grant revenue received now may not be sufficient to fully pay the bonds, that does not relieve the Developer from responsibility to comply with its obligations under the various agreements,” Trimont said in the letter. Remedies for the breach “range from specific performance to a special redemption of all the bonds,” the letter noted. American Dream, which is ranked as the second biggest mall in the country, had to delay its opening and suffered through months of closure due to the COVID -19 pandemic.