American Dream sours for owners of US mega-mall amid 'significant' cash crisis
The owner of the American Dream, the mega-mall in New Jersey once billed as the future of retail, has put up nearly half of the ownership of its two largest malls to stay in business. In March last year, just five months after it opened, American Dream was forced to shut its doors as Covid-19 surged in the US. It stayed closed until October, when some of its attractions and stores reopened.
The 3m-sq-ft mall was regarded as a litmus test for the future of brick-and-mortar shopping at a time when Amazon and online retail are taking an ever larger share of retail sales. Shopping was supposed to be just a fraction of the American Dream experience. The complex, a 30-minute drive from Manhattan, was supposed to house cinemas, restaurants, hotels and multiple theme parks, with multiple attractions having a 2020 opening date.
Now JP Morgan, Goldman Sachs and other investors are set to take a 49% stake in two other giant malls, Mall of America in Minnesota, which is the biggest shopping mall in the US, and the West Edmonton Mall in Canada, after their owner, Triple Five Group, defaulted on a loan for the long-troubled New Jersey project.
At a recent public meeting, Kurt Hagen, senior vice-president of development for Triple Five, said the company was facing a “very significant cash flow crisis” because of the pandemic.
“Not opening and not being able to generate any cash for six months created some very significant problems,” Hagen said.
“It would have been much better if American Dream had burned down or a hurricane had hit it, financially. Because we would have been covered by insurance. But this pandemic that we didn’t see coming has not been covered and it is the worst scenario imaginable.”
Over the years American Dream was being constructed, it racked up criticism for its environmental footprint, being built on a marsh home to 125 different bird species, and for using more than $1bn in taxpayer money. Yet in the midst of the mall’s opening in 2019, the owners of American Dream were optimistic they could find success where their predecessors found failure.
Triple Five believed the mall would create 17,000 jobs, pour money back into New Jersey’s economy through taxes and make malls cool again.
At the public meeting, Hagen described the collateral deal made with JP Morgan and Goldman Sachs, saying the banks would receive 49% of the profits coming from Mall of America and the West Edmonton Mall once the company returns to profitability. The stake in the malls will continue until the collateral is released.
Hagen said the American Dream’s attractions could lead to its financial recovery, saying that the attractions have seen some increases in revenue, though has flattened out because of state restrictions on indoor attractions.
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