Bonds for troubled American Dream mall up 25% this year

Municipal bonds issued for the American Dream mall in 2017 were hammered as the pandemic and other problems plagued the project, but investors have been scooping them up in recent months.

As shoppers gradually return to the New Jersey mall and entertainment complex, the property’s longest duration bonds, issued by the mall’s owner, Triple Five Group, have returned 25.8 percent this year, Bloomberg News reported.

American Dream bonds that in September traded at 87 cents on the dollar to yield 8.2 percent were trading at 111.7 cents Thursday to yield 4.94 percent. That’s a gain of 28.3 percent for the securities, which mature in 2050 and have a 7 percent coupon.

The mall, which reopened in October, reported sales of $54 million in 2020, with $39 million collected in the fourth quarter.

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“As more stores opened and the vaccine is rolled out, we think that traffic at enclosed malls should rebound, with levels at American Dream continuing to rise relative to comparable malls,” according to a research note issued by Barclays’ municipal research & strategy team led by Mikhail Foux.

Yields on investment grade municipal bonds have dropped to record lows against Treasuries as investors pour money into them. In search for higher yields, fund managers have been shifting to riskier bonds, such as the ones issued by Triple Five Group. [Bloomberg News] — Akiko Matsuda