American Dream Mall's court victory a blow to bondholders

Christina Baker

The American Dream mega mall scored a victory in court last month: its property value assessment got cut in half.

A judge slashed the mall's valuation to $1.65 billion, siding with American Dream over East Rutherford, New Jersey — the borough where it's located — which fought to keep the assessment. 

This is just the latest saga in American Dream's checkered history, which includes changed developers, construction delays and financial troubles. Like most of the prior developments, this decision means lower payments for the mall's bondholders and the surrounding towns.

I visited American Dream on Tuesday to see what a $1.65 billion mall looks like. It took me an hour, two trains, a bus and a 15-minute walk to get from The Bond Buyer's offices, near Grand Central, to the mall. 

At least 15 people got off the bus near the mall, although they might not have been American Dream-bound. One family made the trek to the shopping mecca over the dusty roads with no sidewalks. As the mall came into view, a child squealed, "American Dweam!"

The story of American Dream is infamous. 

The mall cost $5.5 billion to build. It cycled through three developers and 15 years of construction delays before the doors opened in 2019 ... temporarily ... shuttered for a while just a few months later when the COVID-19 pandemic hit. 

The revenue never flowed as projected and neither did payments on the mall's $3 billion of private debt and $1.09 billion of tax-exempt bonds. 

I entered through the mall's high-end retail wing, branded as "The Avenue." It was sleek, with plush couches and pulsing music. The walkways were filled with modern-looking sculptures, and the floor-to-ceiling boards covering the numerous empty storefronts were decorated with whimsical pink designs. 

Christina Baker

It was surprisingly busy for a Tuesday afternoon. There were lots of children — including two groups of pre-schoolers who appeared to be on a field trip to the mall, which boasts more than 30 attractions, according to spokesperson Gregg Schwartz. 

The mall started this year valued at $3.3 billion. The borough dropped its property assessment to $2.5 billion in May. But American Dream argued that was still too high.

"The American Dream project has been assessed at values that exceed the assessments for The Mall at Short Hills, Westfield Garden State Plaza, Willowbrook Mall, The Shops at Riverside, and Six Flags Great Adventure combined," the mall's attorneys charged in the lawsuit.

The new valuation, $850 million lower, means American Dream's payments in lieu of taxes will be $24 million annually. The mall's $800 million of bonds, which are backed by those payments, require payment of $54.1 million in interest annually, Bloomberg reported. 

90% of American Dream's property tax bonds are held by Nuveen, according to Bloomberg. 

Schwartz pointed out that the mall was unusual, as much more of its business is devoted to attractions than the average shopping center, including an indoor amusement and water park and ski slopes.

When Triple Five, American Dream's developer, was marketing the bonds, it told investors that it projected more than $2 billion of annual gross sales, and $86 million of sales tax revenue. 

American Dream reported $187 million of revenue in the second quarter of 2025. 

The mall sold two different series of bonds through Wisconsin's Public Finance Authority in 2017. 

The first, $800 million, is backed by a percentage of the mall's PILOT payments. It matures in balloon payments scheduled in 2027, 2037, 2042 and 2050.

The second series is based on a grant agreement with New Jersey. The state agreed to transfer 75% of the mall's sales tax revenue to bondholders for the first 20 years of its existence. Those bonds are also supposed to start amortizing in 2027. 

The bonds were structured so that a missed payment is not a default, according to Lisa Washburn, managing director for Municipal Market Analytics. When the PILOT bonds miss payments, investors have no recourse, she said.

If the mall fails to pay back the principal, the maturity dates will be automatically extended, with the only cutoff at the final maturity date. The PILOT bonds get a six-year grace period after they mature in 2050; the sales tax bonds have a hard stop when the grant agreement with the state ends.

"By that point, it's just game over," Washburn said. After 2056, "The PILOT payments no longer provide security for the bonds."

The bonds backed by sales taxes suffer from problems beyond poor traffic. Many of the attractions, like the water park and the ice skating rink, are exempt from New Jersey's sales tax, Washburn said. Clothing isn't taxable in New Jersey, either. 

The trustee, U.S. Bank, drained the reserve fund for the sales tax-backed bonds in early 2022, according to a report. Bondholders received one payment in August of last year, and the mall missed the payment due this February. The reserve fund now holds around $987, according to the trustee's most recent disclosure.

On August 1, U.S. Bank notified bondholders of non-payment of the interest payment due that day. However, the notice said the trustee had just received $12.1 million from the New Jersey Treasury, the first payment in a year. 

Initially, payments were delayed because of procedural matters, according to Darryl Isherwood, of the New Jersey Treasury's Division of Taxation. Treasury needed verification that American Dream was following the grant agreement, which didn't come until late 2023.

Next, American Dream's parent company, Ameream, needed to "provide the division with several items, including a valid Business Assistance Tax Clearance Certificate, a listing of all tenants operating within the mall, and a Developer's Declaration for Reimbursement of Redevelopment Costs," Ishwerood said. "These documents were received by the Division in late 2023 and early 2024."

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."

Bergen County, where the mall is located, has "blue laws" forbidding retail sales on Sundays, Washburn said. American Dream initially followed these laws, but it's now advertising that all stores are open on Sundays. 

The mall sits on land owned by the New Jersey Sports and Exposition Authority, and it's using that status as a shield from blue laws, according to local reports.

Local officials decried the decision to evade the blue laws to CBS news earlier this year. 

"American Dream's disregard of the state statute is deeply concerning," a spokesperson for Bergen County told CBS. "The county administration has reached out to the New Jersey state attorney general to determine who has the authority to enforce compliance."

Christina Baker

The mall's PILOT agreement was supposed to benefit over a dozen municipalities, but the mall has not made those payments, officials in East Rutherford, Carlstadt, and Secaucus said. East Rutherford also claims the mall owes $400,000 in sewer payments.

When East Rutherford sued, American Dream argued it didn't technically open in 2019, and still isn't fully open, since it never reached full occupancy.  

In March, a judge ruled in favor of East Rutherford, which means American Dream will have to pay $13 million. 

But this case is far from over. The mall is still in court, fighting to have the back payments reflect its new, lower valuation.

The PILOT bonds "seem to be headed for some sort of non-payment situation," Washburn said. "Given that the bonds are non-recourse to the developer, there isn't an alignment of incentives and the bonds appear to be trending toward a potential payment shortfall."

If it's any consolation to bondholders, it appears the mall's private lenders aren't getting paid either. 

Triple Five defaulted on a $1.7 billion private construction loan in 2021, which allowed its lending syndicate to take a 49% stake in its two other properties, the Mall of America and the West Edmonton Mall. It struck a four-year extension on their private loans in 2022. A few months after that deal, it was sued for not paying smaller lenders. 

"It would have been much better if American Dream would have burned down or a hurricane had hit it, financially, because we would have been covered by insurance," Kurt Hagen, a Triple Five executive, told the East Rutherford city council in 2021. "This pandemic that we didn't see coming has not been covered and is the worst scenario imaginable."

Schwartz pointed out the most recent openings: within the past year, the mall has opened an H-Mart food hall with 11 restaurants, a second Starbucks, and several stores in The Avenue. 

American Dream is preparing to open its fourth floor for the first time, with a Ninja Kidz action park that will include zip-lines and trampolines, Schwartz said.

Schwartz said he expects the action park to be one of the mall's biggest attractions. A girl walking by the Ninja Kidz-branded "Coming Soon" sign gasped and pointed it out to her friend. 

The longer I was at the mall, the larger the crowds grew. They generally stayed in the halls or the food courts, leaving the stores largely empty. A man working at an ear piercing kiosk told me the mall gets "packed" on the weekends, and Tuesday's turnout was actually "as dead as it gets."