Municipal bond-funded American Dream Mall reports more red ink

New Jersey’s American Dream Mall reported a $245 million loss as costs increases outstripped modest revenue gains in 2022.

According to a three-page financial document posted on the Municipal Securities Rulemaking Board’s EMMA bond disclosure website Monday, the mall, developed with help of large public financing package, reported a loss four times bigger than the $60 million reported in 2021, the mall’s first full year of operations following the pandemic.

The statement reports $34.3 million of earnings before interest, taxes, depreciation and amortization, on $183.2 million of revenue, a $10 million increase from 2021.

But the positive EBITDA number is crushed by $49.9 million of real estate taxes, the payments in lieu of taxes that backstop one of the tax-exempt bond issues sold to fund construction.

A further $181 million listed as finance expenses, $10.56 million of management fees and $15 million of depreciation are among the items driving the bottom line into the red.

To bankroll the mall’s construction, developer Triple Five, who also owns the Mall of America in Minneapolis, the only U.S. mall larger then American Dream, utilized $2.7 billion in loans that included $1.1 billion of municipal bond sales. 

Financial woes have followed American Dream since its doors swung open late and over-budget in October 2019 only to be shut by lockdown orders months later driven by the COVID-19 pandemic while it was still in pursuit of vendors to fill its many vacant booths and storefronts.

Bondholders have gone without payments on $287 million of limited obligation grant revenue bonds, which the developer blames a slow state grant distribution process while, reserves have been drawn down to make payments on $800 million of PILOT backed project bonds issued though the Wisconsin-based Public Finance Authority.

In March, East Rutherford, the mall’s home municipality, sued its owner and operator, Ameream, for $7.5 million, contending the mall had missed PILOT payments due to the city after sales began.

Triple Five also ran into issues with its privately-held debt, reportedly defaulting on construction loans in February of 2021, which would have allowed creditors to take a 49% stake in the Mall of America that was collateral in the original lending agreement. In November, however, American Dream was granted a four-year extension on those loans by senior lenders led by JP Morgan.

In April, a New York judge also ordered an affiliate of the mall’s owner of the mall to pay $389 million to a group of junior lenders that sued in February, alleging the mall failed to pay back a mezzanine loan that was part of its larger $1.7 billion private financing package.