The American Dream megamall in New Jersey, crippled by construction delays and stalled store openings, is running out of money.
The more than 3-million-square-foot retail and entertainment complex nearly emptied a reserve account to make a $9.3 million payment that was due Tuesday, on about $290 million of debt supported by sales tax receipts, according to a securities filing.
About $820 is left in the reserve fund, the filing said. And it’s unclear whether or not the developers will be able to make their next payment, which is due on Aug. 1.
A representative from Triple Five Group, American Dream’s developers, did not immediately respond to CNBC’s request for comment.
The filing also included a letter from bond servicer Trimont Real Estate Advisors, which said American Dream wasn’t offering updates on project expenses and performance, as it is obliged to do under bond documents.
“While everyone appreciates the difficulties posed by the pandemic, and the likelihood that grant revenue received now may not be sufficient to fully pay the bonds, that does not relieve the developer from responsibility to comply with its obligations under the various agreements,” Trimont said in the letter, dated Jan. 18.
The Covid-19 health crisis brought a new set of obstacles to American Dream, which has been decades in the making. On March 16, 2020 — just three days ahead of the grand opening of dozens of retail stores — the megamall shut down due to pandemic-related restrictions. Parts of the property have since reopened or officially opened, albeit on stalled timelines. A wing of luxury shops opened last fall, with just a handful of stores including Hermes and Saks Fifth Avenue.
American Dream’s sales were about $220 million for the first three quarters of 2021, according to separate public disclosures. And that’s nowhere near the $2 billion that developers projected American Dream would bring in during its first year of operations.
As of Jan. 1, American Dream was about 77% leased, with leases for another 5% of space in negotiations.
Triple Five previously defaulted on its $1.4 billion Mall of America mortgage, missing months of payments. It was struggling to pay its bills when tenants weren’t paying rent on time. However, it eventually reached a deal with lenders to avoid foreclosure of the property, and the loan was made current as of December 2020.
Then, last year, Triple Five lost 49% of its stake in the Mall of America and the West Edmonton Mall in Canada to American Dream’s construction lenders.
In December, Toys R Us opened a flagship store at the property, which was seen as a minor vote of confidence in American Dream.
Bloomberg first reported on the filing.