Triple Five’s American Dream Mall misses $9 million interest payment
The American Dream Mall missed an $8.8 million municipal bond payment that was due Monday, according to a regulatory filing reported by Bloomberg. The interest payment was for the bonds that were used to finance the development of East Rutherford, led by Don Ghermezian’s Triple Five Group.
The missed payment was not an entirely unexpected twist in the American Dream saga. It was reported last month that the star-studded mall was awaiting approval of a document that would certify project expenditures. The state grant has still not been awarded, but the New Jersey Economic Development Authority has not commented on the post about the heist.
Bondholders previously criticized Triple Five for not submitting a statement sooner. An auditor was hired to draft the statement last March, but the documents were not submitted until January.
The missed payment does not constitute a default under the bond clause, sparing Ghermezian the worst-case scenario. The borrower is also not required to repay the loan immediately.
The shopping center is eligible for the subsidy because it is located in an economic redevelopment zone. Grants are capped at $390 million over a 20-year period. About $290 million of municipal bonds are backed by the grants, which are based on the collection of sales tax.
This is the latest installment in the seemingly endless financial nightmare unfolding at American Dream. In June, Triple Five allegedly failed to make a semi-annual payment on an $800 million municipal bond on time. Ghermezian also managed to avoid default this time around.
A securities filing showed the mall lost $60 million last year, racking up $232 million in expenses against just $173 million in revenue. The mall posted $305 million in sales last year, about 15% of the original $2 billion target for the first year of operation.
Triple Five requested a four-year extension to repay $1.7 billion in construction financing. In February, the developer was forced to dip into a reserve account to make a $9.3 million debt payment, leaving a meager $820 in the account.
— HoldenWalter Warner