American Dream bondholders will receive another overdue interest payment

Christina Baker

Investors holding the American Dream Mall's grant revenue bonds soon will receive their first interest payment in a year. 

Trustee U.S. Bank announced in an EMMA filing that it will release $12.2 million to bondholders on September 15. 

The East Rutherford mega-mall has missed nearly every interest and principal payment on these bonds since they were issued through the Public Finance Authority in 2017. This is the first payment bondholders have received since last September. 

There are $287 million of the grant revenue bonds outstanding. Interest payments are due in February and April. 

The bonds are paid with a portion of revenue from American Dream's sales taxes, through New Jersey's Economic Redevelopment and Growth Incentive grant program. 

New Jersey first sent funds to the trustee to pay bondholders last year. U.S. Bank drained the bonds' reserve account to make payments in August of 2021 and February of 2022. Investors received one payment in September 2024, with a total of $25.7 million disbursed. 

U.S. Bank notified bondholders on August 1 that it received $12.2 million from New Jersey that it will remit to bondholders. 

"The trustee has not received any supporting information regarding the calculation methodology used in determining this payment nor any sales tax or other data utilized in such calculation," U.S. Bank said in the EMMA filing. 

Payments were initially held up by paperwork problems, according to Darryl Isherwood, of the New Jersey Treasury's Division of Taxation.

The New Jersey Economic Development Authority needed to verify that American Dream was following the grant agreement, and that didn't happen until November 2023. An assistance agent to the mall's developer notified U.S. Bank in 2022 that American Dream was failing to comply with the documentation process. 

Further necessary documents weren't received by the Division of Taxation until 2024, Isherwood said. 

American Dream's parent company, Ameream, needs to provide a valid business assistance tax clearance certificate "in order for the Department of the Treasury to issue grant payments annually to the bondholders," Isherwood said. "The division has record of a valid tax clearance certificate from Ameream when payment was issued in both August 2024 and July 2025." 

Although $18.6 million of the bonds were supposed to mature in 2024, the indenture was structured so that nonpayment is not a default. The maturity dates on the outstanding bonds will automatically extend until the bond has been fully repaid. If the bonds are not repaid by the final maturity date in 2031, investors have no recourse. 

When the bonds were being marketed, presentations to investors predicted the mall would generate $86 million of annual sales tax revenue, of which 25% would be earmarked toward the state. Sales have fallen far short of those expectations.

Moreover, many of the stores and attractions in the mall — such as clothing and amusement parks — are not subject to sales tax in New Jersey. 

In the original amortization schedule, American Dream was supposed to pay $18.6 million of interest per year, which would drop to $17.5 million when it paid off the principal for the series maturing in 2024.