American Dream developers have failed to make an interest payment on $290 million in New Jersey-backed revenue bonds that were sold to help finance the $5 billion mall and entertainment complex.
The massive, 3.3-million square-foot mall in East Rutherford, which features an indoor ski slope, water park, amusement rides and more, did not make an $8.8 million payment that was due on Monday, according to a regulatory filing to bondholders by U.S. Bank Trust Company.
“The trustee has not received any revenues for payment of the Aug. 1 debt service, and the reserve account does not have sufficient funds to make such payment,” states the filing.
The filing states developer, Triple Five, missed the first semi-annual interest payment to bondholders due to “insufficient funds.” A reserve account created for the purpose of making debt service payments has a balance of $862.12, the notice states.
Bloomberg, which first publicized Monday’s regulatory filing, reported that failure to make a payment on grant-revenue bonds will not require American Dream to pay back the loan immediately. The regulatory notice states that failure to make the Aug. 1 payment does not constitute a default.
An American Dream spokesperson told NJ Advance Media on Wednesday that American Dream is under no financial obligation to make payments to bondholders.
Instead, bondholders are paid from sales taxes generated from the mall that are paid to the state, which then appropriates funds in its budget to make the necessary payments, according to the spokesperson.
“The bondholders are paid exclusively from sales tax generated from the project, subject to state appropriation of up to 75% of those collected funds,” the spokesperson said in an email. “We have no financial obligation to make any payments to the bondholders.”
The spokesperson added, “we believe the state has appropriated funds in the budget to make bondholder payments.”
Last summer, Triple Five withdrew $9,285,625 from its debt service reserve to pay a scheduled, bi-annual bond payment, leaving a balance of $9,286,082.87. In February, the developer paid another installment and was left with less than $900 in the reserve account.
NorthJersey.com on Tuesday reported American Dream lost $60 million during the pandemic and has challenged a $9 million amount that surrounding towns say the mall owes them for helping to back the project financially.
Anthony G. Attrino may be reached at tattrino@njadvancemedia.com. Follow him on Twitter @TonyAttrino. Find NJ.com on Facebook.
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August 03, 2022 at 07:28PM
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American Dream fails to make $8.8M interest payment on $290M in N.J.-backed bonds - NJ.com
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