American Dream faces $389M lawsuit by construction financing lenders

Kimberly Redmond//February 14, 2023

American Dream faces $389M lawsuit by construction financing lenders

Kimberly Redmond//February 14, 2023

American Dream is being sued by two junior lenders who provided private loans that helped finance construction of the $5 billion Meadowlands megamall.

Filed Feb. 7 in New York State Supreme Court by SOL-MM III LLC, an administrative agent working on behalf of firms linked to Western Asset and Nonghyup Bank of South Korea, the lawsuit – which was first reported by Bloomberg Law – seeks to recoup more than $389 million in loans that came as part of a larger $1.7 billion construction financing package.

Though senior lenders on that debt granted Triple Five Group, the mall’s owners, a four-year extension on repayments after defaulting, that November 2022 agreement “effectively cut those junior creditors out,” prompting them to pursue legal action, according to a report by The Bond Buyer.

Exterior of the American Dream in the Meadowlands.
American Dream reporting $422 million in gross sales in 2022, a 38.4% increase from the prior year. – DANIEL J. MUNOZ

American Dream spokesperson Jessica Griffin declined to comment on the lawsuit Tuesday afternoon.

After years of delays, the $5 billion, 3.5 million-square-foot American Dream finally opened in October 2019, but was temporarily shuttered just a few months later due to the onset of the COVID-19 pandemic.

In 2021, American Dream generated about $173 million in revenue, but its expenses totaled more than $232 million. And it recorded $305 million in sales — far below the $2 billion Triple Five initially projected for the property’s first year of operations.

However, the mall fared a bit better last year, reporting $422 million in gross sales, a 38.4% increase from the prior year.

Earlier this month, U.S. Bank Trust Co., a trustee representing another set of creditors, said an $8.8 million semi-annual interest payment from American Dream to bondholders had been missed.

In a statement to NJBIZ, Griffin said, “The trustee’s notice was to advise that sales tax revenues have not yet been received and was not a notice of default. American Dream is not responsible for making the payments to the bond trustee for the ERG Grant bonds or to fund the reserve. American Dream and its tenants, like all other businesses in the state, have been making sales tax payments, which are the source of revenue to make the grant payments to the bond trustee.”

American Dream
American Dream is home to attractions such as Nickelodeon Universe Theme Park. – MATTHEW FAZELPOOR

“Subject to appropriation, bond payments are made by the state to the bond trustee and distributed to the bondholders. As you may know, the NJEDA [New Jersey Economic Development Authority] and other state agencies are currently completing their review and certification process under the grant agreement which needs to be completed prior to initiating the payment process. Once this review is completed, we anticipate that the funding release process will proceed as specified in the grant agreement and bond documents. We continue to assist the state in their review process,” she said.

Over the past several months, Triple Five, which also owns the Mall of America and the West Edmonton Mall, has steadily added new retail stores, attractions and restaurants to American Dream, which now boasts a tenant lineup that includes Saks Fifth Avenue, Hermès, Saint Laurent, Tiffany & Co., Gucci, Dolce & Gabbana, Ferrari, Aritzia, H&M, Primark, Uniqlo, Sephora, Zara and H Mart.

American Dream is also home to Toys R Us’ global flagship store, as well as DreamWorks Water Park, Nickelodeon Universe Theme Park, Legoland Discovery Center, Sea Life Aquarium, Big Snow ski park and Dream Wheel.