The construction manager for the beleaguered American Dream mall and entertainment complex in New Jersey’s Meadowlands is suing JPMorgan Chase & Co. to recover more than $30 million of unpaid work and accrued interest for the project.
Denver-based PCL Construction Services alleges JPMorgan, which arranged a construction loan and serves as administrative agent for American Dream’s developer, Ameream, is obligated to pay the bill if the developer doesn’t, according to the lawsuit filed June 15 in a New York federal court.
“Ameream is now in financial distress,” PCL Construction Services said in the lawsuit. “Agent now has a contractual obligation to advance the amounts due and owing that Ameream failed to pay as they became due. Yet, agent has failed to do so.”
Triple Five Group created Amerean to develop the megamall.
Gurpreet Kaur, a JPMorgan spokesperson, declined to comment. Jessica Griffin, a spokesperson for American Dream, didn’t provide immediate comment.
Lenders led by JPMorgan provided $1.7 billion in construction borrowing. In connection with the loan, JPMorgan, as agent, agreed to backstop Ameream if the developer couldn’t pay PCL, just as the bank “had the power to seek recovery from Ameream for every dollar advanced to PCL,” according to the lawsuit.
In November, the megamall received a four-year extension on the loan from the JPMorgan-led group.
Rather than work to resolve the dispute, Ameream has “retroactively tried to manufacture claims of purported defective construction work by PCL that are meritless,” according to the suit. JPMorgan has used the developers claims to refuse to pay PCL, the construction company said in its complaint.
PCL has a relationship with American Dream’s owner Triple Five that spans more than 40 years, serving as construction manager for Triple Five’s West Edmonton Mall and Mall of America, according to bond offering documents.
American Dream, located across the Hudson River from New York City, opened its complex in October 2019, almost two decades after a mall on the site was first proposed. Five months later, the pandemic spurred lockdowns and postponed the opening of the mall’s retail stores until October 2020.
Since then, the sprawling complex, featuring an indoor ski slope, amusement park, water park, stores and restaurants, has struggled. The 3.5 million-square-foot site was 84% leased as of March 31, according to a securities filing.
American Dream reported about $422 million in gross sales in 2022, a 38.4% increase from the prior year, but far short of the nearly $2 billion that a 2017 study projected it would bring in during its first year of operations.
Earlier this year, about $300 million of municipal bonds backed-by state grants issued for the project missed two interest payments. East Rutherford, New Jersey, the town that’s home to American Dream has sued the complex over its refusal to make about $7.5 million in property tax-like payments and $400,000 for sewer service.
American Dream also has $800 million of municipal-debt backed by payments in lieu of taxes. American Dream has made payments on the bonds but is challenging its tax assessments, which would reduce the payments.
The case is 1:23-cv-05041-PGG, PCL Construction Services, Inc. v. JPMorgan Chase Bank, N.A., US District Court, Southern District of New York (Manhattan)
Author: Martin Z. Braun