New Jersey mall and entertainment complex American Dream has failed to make an interest payment on municipal loans sold to help finance the $5 billion venture. The missed payment was for $8.8 million, according to a regulatory filing. Payment on the $287 million debt was due Aug. 1, according to the filing. The balance in the reserve account previously used to make payments on the loans is $862.12. However, failure to make the payment doesn’t constitute a default, nor does it require American Dream to pay back the loan immediately.
Additionally, American Dream has “no financial obligation to make any payments to the bondholders,” said a company spokesperson in a statement emailed to Bloomberg. The statement also noted that bondholders are “paid exclusively from sales tax generated from the project, subject to state appropriation of up to 75% of those collected funds.”
The more than 3-million-square foot mall, which features an indoor ski slope, amusement park and water park, was designed to operate as a complete destination rather than a traditional mall. The project has had a troubled history, including the short window between the late 2019 grand opening and COVID-19 forcing the mall to temporarily shut down. However, American Dream persevered and the final section, a hall of luxury retailers called The Avenue, opened in fall 2021.
American Dream also has struggled against the same challenges that all malls have faced — bringing back foot traffic after the surge in ecommerce prompted by the pandemic. Focusing on experiences is one of the key strategies developers have looked into, and American Dream is positioned to tap into this approach in a major way. However, it remains to be seen if the theme park-studded space can make the most of this opportunity — the destination reported a nearly $60 million loss in 2021, according to a draft filing with the Municipal Securities Rulemaking Board.