Bondholders behind The American Dream Mall in New Jersey could be in for some pain.
Mutual funds and investors that bought bonds backing the construction of the American Dream Mall near the Meadowlands have seen hundreds of millions of dollars in losses and more could be on the way, according to the Wall Street Journal.
The price of some of the almost $1 billion of municipal bonds fell to about 87 cents on the dollar in July after the company announced that some mall tenants were vacating, according to the Journal. The bonds were trading at 120 cents prior to the coronavirus.
Mutual funds that owned about $600 million of American Dream municipal bonds had losses of about $196 million on their investment from March through June, according to the Journal.
Lenders could be in trouble as well. JPMorgan Chase & Co. arranged a $1.67 billion construction loan for American Dream in 2017. The bank has not said what it values the loans at now.
American Dream, which was built by Triple Five and opened last fall, has been closed since March. Triple Five initially projected that 4 million people annually would visit the mall.
The pandemic forced it to close just as it was preparing to open 60 to 100 more stores, restaurants and a water park. It has also seen one of its main anchor tenants, Lord & Taylor, file for bankruptcy in August. [WSJ] — Keith Larsen