American Dream megamall nearly empties its reserves to make a bond payment

American Dream megamall and entertainment complex in East Rutherford, NJ After more than 17 years in the making, it finally opened on October 25, 2019. Then came the coronoavirus pandemic.

Timothy A. Clary | AFP | Getty Images

American Dream megamall in New Jersey, crippled by construction delays and blocked store openings, is running out of money.

The more than 3 million-square-foot retail and entertainment complex nearly emptied a reserve account to make a $ 9.3 million payment due Tuesday of about $ 290 million of debt backed by VAT receipts, according to a securities filing.

About $ 820 is left in the reserve fund, the filing said. And it is unclear whether the developers will be able to make their next payment, which is due on August 1st.

American Dream spokeswoman Melissa Howard said the Triple Five Group developers are “extremely pleased” with the tenants’ early success. This year, American Dream will open more than 100 retail, entertainment and restaurant concepts, she said, including a two-story Gucci flagship.

The filing also included a letter from bond service Trimont Real Estate Advisors, which said that American Dream did not offer project expense and performance updates that it is required to do under bond documents.

“While everyone appreciates the difficulties posed by the pandemic and the likelihood that grant revenue now received is not sufficient to fully pay the bonds, it does not absolve the developer from the responsibility of complying with its obligations under the various agreements,” Trimont said in the letter, dated 18 Jan.

The Covid-19 health crisis brought a new set of obstacles to the American Dream, which has been decades in the making. On March 16, 2020 – just three days before the grand opening of dozens of retail stores – the mega-hall closed due to pandemic-related restrictions. Parts of the property have since reopened or officially opened their doors, albeit on locked timelines. A wing of luxury stores debuted last fall, with only a handful of stores including Hermes and Saks Fifth Avenue.

American Dreams’ sales were around $ 220 million for the first three quarters of 2021, according to separate government data. And it’s nowhere near the $ 2 billion that developers expected American Dream to bring in during its first year of operation.

Pr. On January 1, American Dream was about 77% leased, with leases for a further 5% of the space in negotiations.

Triple Five has previously defaulted on its $ 1.4 billion Mall of America loan and was missing months of payments. It struggled to pay its bills as tenants did not pay rent on time. However, it eventually reached an agreement with lenders to avoid foreclosure of the property, and the loan was enforced from December 2020.

Last year, Triple Five then lost 49% of its shares in Mall of America and West Edmonton Mall in Canada to American Dreams builders.

In December, Toys R Us opened a flagship store on American Dream, which was seen as a minor vote of confidence in the mega-hall.

Bloomberg first reported on the filing.

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