American Dream’s bondholders might not be getting their money in a few weeks as the star-crossed mall sputters toward an Aug. 1 payment date.
This time, the retail complex is not entirely to blame: Its owners, the Ghermezian family’s Triple Five Group, are waiting on a grant from New Jersey.
The state’s Economic Development Authority has yet to approve a necessary document from developer Triple Five Group certifying project expenditures, Bloomberg reported. A spokesperson for the mall said the cost statement has been submitted, but the reason it hasn’t been approved is unclear.
New Jersey’s budget allocated $87 million for an economic redevelopment grant program; the mall is eligible because it’s in an economic redevelopment area.
The grants top out at $390 million over a 20-year period. It’s not known how much the mall would receive if its cost statement were approved.
Nervous bondholders have criticized Triple Five for not submitting the statement sooner. An auditor was hired to do it last March, but the paperwork wasn’t submitted before January.
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With the August payment looming and the mall’s troubled history, the bondholders could be forgiven for fretting. The mall is scheduled to make a $9.3 million payment on the bonds at the start of August; $290 million in municipal bond obligations are backed by the grants, which are based on sales-tax collections.
Financial problems have been a constant issue for American Dream, which aimed to make East Rutherford a mecca for shoppers and entertainment seekers but ran into problems with construction, financing, the retail apocalypse and the pandemic.
Last month, the Ghermezians’ firm reportedly failed to make a semiannual payment on an $800 million municipal bond on time. Still, it has avoided default.
A recent securities filing revealed the mall lost $60 million last year, as $173 million in revenue was outstripped by $232 million in expenses. The retail complex recorded $305 million in sales last year, about 15 percent of the once-forecasted $2 billion goal for its first year of operations.
The mall wouldn’t technically default if it fails to pay the grant revenue bonds on time. According to the bond servicer, however, that could trigger a special redemption of the bonds.
Triple Five has also been seeking a four-year extension to pay off $1.7 billion in construction financing. In February, the mall was forced to draw on a reserve account to make a $9.3 million debt payment, draining the account of all but $820.
[Bloomberg] — Holden Walter-Warner