The American Dream Meadowlands Mall – A Very Unusual Muni Issue

This $1.068 billion shopping mall development in the New Jersey meadowlands was started in 2017 and reached it’s opening date just as the Covid-19 pandemic hit. It then had to invade the debt reserve to make its August 1, 2020 interest payment. This initially caused the bonds to drop to a price of 87, but a strong municipal market combined with the 7% coupon rate on these bonds drove prices back to 111 at last count. As further encouragement, the developer has arranged for a tour of the facility for current and potential investors on September 11, 2021. 

The facility is a massive 3.2 million square feet, which is larger than a typical regional or super-regional mall. It is reported as 99% leased. There are practically no financial statements on file with the MSRB, with all references to actual financial statements being merely letters on status. Also disturbing is that none of the credit rating agencies has provided ratings. This is unusual for such a large issue especially since the developer reportedly invested over $500 million of its funds in the project and expects to need another $1 billion in financing. This maybe where the term ‘Dream’ in the title comes from. 

The facility is in dispute with the state of New Jersey regarding the property tax basis for the facility. This dispute may have to do with the fact that the developer went to the Wisconsin Public Finance Authority for approval of these bonds rather than a New Jersey authority as would be normal. Getting concessions on such things as property taxes before beginning such a project is a normal step before launching such a large project. Here, for some reason, they chose to ignore this and go outside the state for approval. One can only wonder why such a step was taken. Time will tell whether this was a prudent decision. CUSIP 74446HAD1