The municipal bonds that helped finance the nation’s second largest mall are showing signs of wobbling.
The American Dream mall in East Rutherford, New Jersey, was delayed for years, then opened shortly before the COVID-19 pandemic.
On June 3, the trustee for $800 million of bonds said in a notice posted on the Municipal Securities Rulemaking Board’s EMMA bond disclosure website that funds to support bond repayments were running late and, as a result, it made an unscheduled $11.36 million draw on a reserve account for the revenue bonds to make the June 1 interest payment. “In the event the May PILOT is not made on or before June 16, 2022, Default by the Developer will exist under the Financial Agreement,” the notice said.
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Marc Pfeiffer, assistant director at the Bloustein Local Government Research Center at Rutgers, New Jersey’s state university, believes that might just give the megamall a fighting chance. He said that though the economic forecast is dire, the American Dream‘s non-retail offerings, as well as its location in one of the most densely populated areas of the U.S., might mean its best days are ahead if it can weather the lean times ahead.
“There’s nothing else like that combination, and even in the post-pandemic, order online environment,” he said. “I think there’s enormous potential for that on top of regional shoppers.”
The Bond Buyer, June 17, 2022 (subscription required)
