American Dream, the megamall in New Jersey’s Meadowlands, has seen its losses increase fourfold in one year, according to a draft securities filing.
The 3.5-million-square-foot shopping and entertainment complex, home to an indoor ski slope, amusement park and water park, lost about $245 million in 2022 as expenses almost doubled to $428 million, according to the three-page document posted Monday to the Municipal Securities Rulemaking Board’s EMMA website. Financial expenses, which typically include debt service payments, ballooned to $189 million.
Kristen Buckley-White, an American Dream spokesperson, didn’t respond to a request for comment.
American Dream, which has faced construction delays, pandemic shutdowns, and a fire that closed its indoor ski slope for several months, has struggled to manage its debt.
In November 2022, lenders led by JPMorgan Chase & Co. gave American Dream a four-year extension on repaying $1.7 billion in construction borrowing. The mega mall, located across the Hudson River from New York City, had to draw on a debt reserve fund to pay interest on $800 million of municipal bonds, backed by fees the mall’s owner gives to bondholders instead of paying property taxes.
The so-called payments in lieu of taxes that back the bonds could decline further if American Dream wins a tax appeal against the borough of East Rutherford and a judge reduces the value of the mall. The mall is appealing five years of assessments by the borough in state tax court. The bonds trade at about 91 cents on the dollar.
Nuveen LLC is American Dream’s biggest municipal bondholder with $600 million of the $800 million payment in lieu of tax bonds as of July 31. A Nuveen spokesperson didn’t respond to a request for comment.
Owned by the Ghermezian family, which also holds a majority stake in Minnesota’s Mall of America, American Dream opened the doors of its entertainment complex in October 2019, almost two decades after a mall on the site was first proposed.
The owners had predicted 40 million annual visitors, but the project was walloped by the pandemic as successive waves of the coronavirus discouraged shoppers and tourists. Since then, the sprawling complex, has struggled to lease retail space and generate rental income.
In 2021, Ghermezian’s forfeited 49% equity stakes in the Mall of America and the West Edminton Mall in Canada to lenders as collateral for American Dream, which lost $60 million that year. Revenue grew a mere 6% to about $183 million in 2022.
As of July 1, American Dream reported being 85% leased, up from 83% as of Dec. 31, 2022 and 77% at the end of 2021. Tenant rents accounted for $60 million of revenue in 2022; attractions like the water park, amusement park and ski slope brought in almost $100 million.
The mall reported total equity of about $380 million in 2022, down 24% from a year earlier, and liabilities that fell 11% to $2.3 billion.
Author: Martin Z. Braun