American Dream Megamall: Investors Must Measure the Risk

WNYC | June 6, 2017 | Planning
Preliminary bond offerings catalog an array of risks, including transportation and America’s dwindling romance with malls

Credit: Adrian Gaut/Bloomberg Businessweek
american dream cranes
Nothing is ever simple with the American Dream megamall planned for the New Jersey Meadowlands — especially financing. Triple 5, the Canadian company behind the shopping-entertainment “destination” is looking to raise $2.8 billion to finance the final phases of construction — some $1.1 billion to come from the sale of tax-free, unrated government bonds.

For that bond sale, two preliminary offering memoranda are now in circulation: one is for an $800 million bond package backed by payments in lieu of taxes (PILOT); the other is for a $300 million bond package backed by sales tax receipts generated after American Dream opens.

The documents — over 1,800 pages of them — disclose a wide array of risks that potential investors will have to consider.

Transit is one. According to the PILOT bond memo, “The difficulty, expense, unfamiliarity and time-consuming nature of these transportation options, especially for persons carrying numerous purchases, may present a special risk.”

An even greater challenge may be the seeming end of America’s love affair with malls. A study by Credit Suisse recently suggested 20 percent to 25 percent of U.S. malls could close by 2022.

Read the full story on WNYC News, a content partner of NJ Spotlight.