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KEY POINTS
The American Dream megamall in New Jersey, crippled by construction delays and stalled store openings, is running out of money.
Developers nearly emptied a reserve account to make a $9.3 million payment that was due Tuesday, on about $290 million of debt supported by sales tax receipts, according to a securities filing.
About $820 is left in the reserve fund, the filing said. And it’s unclear whether or not the developers will be able to make their next payment, which is due on Aug. 1.
The American Dream megamall in New Jersey, crippled by construction delays and stalled 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 that was due Tuesday, on about $290 million of debt supported by sales tax receipts, according to a securities filing.
About $820 is left in the reserve fund, the filing said. And it’s unclear whether or not the developers will be able to make their next payment, which is due on Aug. 1.
American Dream spokeswoman Melissa Howard said developers Triple Five Group are “extremely pleased” with the early success of tenants. 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 servicer Trimont Real Estate Advisors, which said American Dream wasn’t offering updates on project expenses and performance, as it is obliged to do under bond documents.
“While everyone appreciates the difficulties posed by the pandemic, and the likelihood that grant revenue received now may not be sufficient to fully pay the bonds, that does not relieve the developer from responsibility to comply with its obligations under the various agreements,” Trimont said in the letter, dated Jan. 18.
The Covid-19 health crisis brought a new set of obstacles to American Dream, which has been decades in the making. On March 16, 2020 — just three days ahead of the grand opening of dozens of retail stores — the megamall shut down due to pandemic-related restrictions. Parts of the property have since reopened or officially opened their doors, albeit on stalled timelines. A wing of luxury shops debuted last fall, with just a handful of stores including Hermes and Saks Fifth Avenue.
American Dream’s sales were about $220 million for the first three quarters of 2021, according to separate public disclosures. And that’s nowhere near the $2 billion that developers projected American Dream would bring in during its first year of operations.
As of Jan. 1, American Dream was about 77% leased, with leases for another 5% of space in negotiations.
Triple Five previously defaulted on its $1.4 billion Mall of America mortgage, missing months of payments. It was struggling to pay its bills when tenants weren’t paying rent on time. However, it eventually reached a deal with lenders to avoid foreclosure of the property, and the loan was made current as of December 2020.
Then, last year, Triple Five lost 49% of its stakes in the Mall of America and the West Edmonton Mall in Canada to American Dream’s construction lenders.
Which is code talk for the wealthy always know how to get away with development and business ventures without actually risking anything...
They apparently had to give up 1/2 of the ownership stake of the mall of America already. Not to mention they likely have had to take out a ton of debt and potentially will have to sell all or part of its ownership stake in American Dream.
Ya mean the dystopian mall that took nearly 20 years to partially build on a swamp where you have to pay to park in order to spend outrageous amounts of money inside the place is broke?
NJ noted for its colossal economic failures brought to you by incompetence and lack of vision.
No one ever loses their job for failure to predict cost and time to complete infrastructure projects.
Would prefer to see muskrat houses and flood plain in lieu of some mega mall in the heart of the wild crime ridden northeast nj.
Oct 27, 2020 — FTA financial documents projected ARC construction costs could balloon to $14.7 billion, with the cost of tunnel work in the Hudson, New Jersey .
Jun 24, 2021 — The construction firm is locked in a dispute with Newark Airport's operator over a separate project involving a $105 million cost overrun
Jul 26, 2021 — Teams of elite construction companies are now demanding payment for hundreds of millions of dollars in cost overruns
Nov 26, 2006 — An audit by the city of Newark revealed that the New Jersey Devils arena currently under construction will cost an extra $102 million
Jun 24, 2021 — Newark is the largest city in New Jersey with over 310000 residents. ... project involving a $105 million cost overrun for new bridge.
The only glimmer of hope was when .......
Gov. Christie scraps already-started $9 billion NJ-NY rail tunnel
If NJ gets money from the feds for infrastructure, expect more incompetence, graft, fraud and higher taxes, tolls and gasoline prices.
Do a search on just Newark and see the litany of infrastructure projects already underway. From airports to ports to housing..... breathtaking! and more money due to arrive from the feds. NJ surely is where taxpayer cash comes to disappear.
Follow the money and watch it disappear..........$44M of Infrastructure Improvements Planned to Come to Newark Port Street Corridor
Can we do a casino as a replacement? They can make money back in 5 years.
Maybe yes, maybe no.
In case you don't recall a "very successful businessman" couldn't make a go of it with two casinos.
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