Lenders behind the American Dream mega mall project are in the final stages of taking a 49% stake in two other malls owned by developer Triple Five that were used as collateral for a $1.2 billion construction loan in New Jersey, the Financial Times reported, citing people involved in the deal.
The loan that was defaulted on is held largely by JP Morgan, along with Goldman, Starwood Capital, CIM Group, Soros Fund Management, Wafra and iStar. The restructuring, the Financial Times reported Friday, was expected to close as early as “this week,” although the process has been complicated by the number of lenders and could be delayed.
A spokesperson for American Dream declined to comment.
The cash crisis at American Dream came to light earlier this month when Kurt Hagen, senior vice president of development for Triple Five, told a joint meeting of the Bloomington, Minn. city council and its port authority that the pandemic created a “very significant cash flow crisis” for American Dream and that collecting on the collateral was “likely to happen.”
Hagen described the collateral pledge as an indirect ownership interest that does not include any assets or Mall of America property. “It simply means that once we return to profitability, 49% of those profits would go to the American Dream lenders until such time as that collateral is released,” Hagen said.
The developer has also filed a lawsuit against a prospective tenant for breach of contract because it failed to open two eateries. And construction companies have filed nearly $41 million in liens against Triple Five, saying they are owed for work performed at the site.
American Dream shut down last March three days before it planned to open its DreamWorks Water Park and retail. It did not reopen until October 1 and currently has eight attractions and 130 stores operating. And more openings are scheduled, including for its Sea Life Aquarium and Legoland Discovery Center, which are slated to debut May 4.
“Not opening and not being able to generate any cash for six months created some very significant problems,” Hagen said during the public meeting.
Triple Five also defaulted on its Mall of America mortgage during the shut down. It missed three $7 million payments on its $1.4 billion mortgage. The Canadian-based developer reached an agreement with lenders in August to avoid foreclosure on the Minnesota property and the account was brought current as of December.
The pandemic and ensuing financial problems are just the latest hiccups for the development in the Meadowlands, which has been in the works for nearly 20 years. Triple Five is the third developer to take on the project, originally known as Xanadu.
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Allison Pries may be reached at apries@njadvancemedia.com.