• American Dream Megamall at Risk of Default on $800 Million in Municipal Bonds

    American Dream, the $5 billion megamall in North Jersey, is at risk of defaulting on an $800 million bond next week for failing to make a twice-yearly interest payment on the debt as the project's financial problems continue.

    Triple Five Group, the Canadian developer of the shopping-and-entertainment complex in East Rutherford, was notified last week by bondholder trustee U.S. Bank National Association that it had failed to pay an $11.4 million interest payment due last Wednesday, June 1, on the bonds.

    If the payment is not made on or before June 16, "default by the developer will exist under the financial agreement," the trustee told bondholders in a securities filing Friday. The trustee took the payment that was due out of a reserve account, according to the filing.

    The situation is just the latest in a long string of financial concerns for the 3.5 million-square-foot American Dream. The development recently reported it lost $59.4 million last year as it tried to bounce back from the COVID-19 pandemic's disruption, which closed it down for several months in 2020.

    American Dream declined to comment Monday on the missed interest payment. The Wall Street Journal first reported that Triple Five had not made the payment.

    The megamall has $800 million of municipal debt backed by payments in lieu of taxes, so-called PILOTs. Overall, bondholders and banks lent Triple Five roughly $2.7 billion for American Dream, which has attractions that include an indoor water park, an indoor amusement park, an indoor ski dome, an aquarium and a miniature golf course.

    American Dream has more challenges looming: It has a $9.3 million debt service payment due Aug. 1. In February, American Dream almost completely drained a reserve when it made an unscheduled draw of $9.3 million from it for debt service due on bonds for the period spanning Aug. 1 to Jan. 31. That left only $820 in the reserve fund at that time.

    That payment was due on roughly $290 million of debt supported by sales tax receipts, according to a securities filing. American Dream has the $800 million in PILOT bonds and the $290 million of municipal bonds backed by the sales tax, which total roughly $1.1 billion. That debt is senior to the $1.7 billion in construction loans that American Dream has.

    Triple Five defaulted on loans for American Dream last year. It had put up 49% stakes in two other megamalls, Mall of America in Bloomington, Minnesota, and West Edmonton Mall in Canada, as collateral on those loans, and Bloomberg News reported it forfeited those stakes.

    CoStar News exclusively reported in 2019 that minority stakes in the two malls had been offered to get the stalled American Dream development rolling.

    Source: www.CoStar.com