American Dream angles for $1.7B payment extension
Beleaguered mall working to restructure debt and dodge bankruptcy
By: TRD Staff
Triple Five Group CEO Don Ghermezian (American Dream, Getty Images, iStock, Illustration by Kevin Cifuentes for The Real Deal)
The owner of New Jersey’s American Dream mall is dealing with the beleaguered property’s reality.
Don Ghermezian’s Triple Five Group is asking for a four-year extension to pay off $1.7 billion in construction financing, people with knowledge of the matter told Bloomberg. The loans were made by a group of lenders including JPMorgan Chase in 2017, including a $1.2 billion senior loan and $475 mezzanine loan due to be repaid last year.
An extension on the loans may require concessions from Triple Five, such as a higher interest rate or more equity in the project. The initial loans required interest-only payments from 6.75 percent to 9.75 percent above the London Inter-Bank Offered Rate, according to Bloomberg.
Whether or not the lenders would foreclose on the property remains to be seen, as it could be hard to fetch a decent price on the $5 billion complex.
Triple Five is attempting to avoid bankruptcy at the mall and entertainment complex, which also has $1.1 billion in municipal bonds. The company is trying to restructure its $3 billion in debt, according to Bloomberg.
The mall recently needed to take $9.3 million from a reserve account to make a payment on about $290 million in debt, Bloomberg reported. A securities filing showed only $820 left in the account, leaving the mall in serious danger of missing its next payment on Aug. 1.
The mall in New Jersey’s Meadowlands has been enduring a nightmare since its 2019 opening. Last August, the mall also took $9.3 million from its reserves for a bond payment. The municipal bonds were issued in 2017, backed by 75 percent of sales tax receipts from purchases.
Retail stores didn’t open until October 2020, when the area was still grappling with the pandemic. The mall was 76 percent leased in the second quarter of 2021 and reported $78.1 million in gross sales. As of Jan. 1, the mall was reportedly only 77 percent leased while leases for another 5 percent of the mall were being negotiated.
Sales during the fourth quarter totaled $82.4 million, Bloomberg reported, down about 1 percent from the previous quarter despite the holiday shopping season.
Cash flow problems have previously led senior construction loan holders to take minority stakes in other Triple Five properties, including the Mall of America and the West Edmonton Mall.
[Bloomberg] — Holden Walter-Warner