This story was updated Feb. 3 to clarify interest payments are related to municipal bonds tied to the American Dream shopping mall.
Municipal bonds tied to American Dream, the megamall in the New Jersey Meadowlands, have missed a roughly $9 million semiannual debt service payment that was due Wednesday.
The bonds backing the $5 billion shopping-and-entertainment complex, which is located in East Rutherford, haven’t paid the $8.8 million interest due on roughly $290 million for the development, according to a regulatory filing. A reserve account, drawn on last year to make previous debt service payments, now only has a balance of $878.50 left, "insufficient funds" to cover the amount due, according to U.S. Bank National Association, a bond trustee.
Canadian mall developer Triple Five, owner of the 3.5 million-square-foot American Dream, was hit hard by pandemic-related closures in 2020 and other setbacks. It has since sought to establish itself with shoppers as well as patrons for its entertainment attractions. That roster includes an indoor amusement park, an indoor water park, an aquarium, a ski dome, an observation wheel and an ice skating rink.
In an emailed statement to CoStar News, American Dream said it is “not responsible” for making payments to the trustee for the bonds backed by grants from the New Jersey Economic Development Authority or to fund the reserve. The mall said debt service payments are made by the state, following a review and certification process, to the bond trustee and distributed to bondholders.
Last year, American Dream also said that it wasn’t responsible for the debt service payments.
The notice from U.S. Bank “was to advise that sales tax revenues have not yet been received and was not a notice of default. ... American Dream and its tenants, like all other businesses in the state, have been making sales tax payments, which are the source of revenue to make the grant payments to the bond trustee,” the statement said.
Following its ongoing financial woes, American Dream in November won a four-year reprieve from one of its lenders. A group led by JPMorgan Chase extended the term for $1.7 billion in construction financing owed by American Dream. That debt will now mature in October 2026.
Despite the fact that the American Dream bonds missed this year's Feb. 1 payment, it "does not constitute an event of default," according to Wednesday's filing.
Last year in February, the reserve fund was used to make the $9.3 million debt service payment that was due the first day of that month, virtually draining it for that unscheduled draw.
Overall, bondholders and banks lent Triple Five roughly $2.7 billion to complete American Dream. In addition to the funds from the private lenders, the project has about $290 million of municipal bonds supported by sales tax receipts, as well as $800 million of municipal debt backed by payments in lieu of taxes, so-called PILOTs. That debt is senior to the $1.7 billion in construction loans that American Dream has.
Last year American Dream was tardy on — and then finally made them past due — a number of payments relating to the roughly $1.1 billion in municipal bonds issued for the property.