Move over, New Jersey. Here comes “Arabian Dream.”
A week after the long-delayed partial opening of its American Dream project in the Meadowlands, New Jersey, Triple Five has announced a joint venture with a Saudi real estate company to build “the world’s largest entertainment and shopping center” in Riyadh, Saudi Arabia.
The $5 billion mega-mall will be developed by Triple Five subsidiary Arabian Dream KSA and Al Akaria Saudi Real Estate Company, which is partly owned by the Saudi government, according to news reports. The companies announced the project yesterday. It will offer theme parks, water parks, recreational and sports facilities, restaurants, retail stores and hotels, according to the developers.
Triple Five affiliate Calverton Aviation and Technology is in contract to buy 1,644 acres of vacant industrial land from the Town of Riverhead Community Development Agency for $40 million.
Riverhead officials remain at odds over the extent of financial disclosure required of Triple Five before the deal was given final approval last November — and whether the town should require the company to provide additional financial disclosure before the sale is finalized.
The town did not require Triple Five to submit financial statements before approving the company as a “qualified and eligible sponsor” under state Urban Renewal Law. The privately owned multinational conglomerate, best known for developing and operating the two largest shopping malls in North America, was hesitant to submit financial statements. It submitted a letter from the accounting firm Grant Thornton confirming that Triple Five had “in excess of $40,000,000 US available cash equivalent balances as of August 14, 2018.” Triple Five also submitted letters of interest from Goldman Sachs and Mosaic Real Estate Investors to assist the company with financing for the Calverton project.
Supervisor Laura Jens-Smith, who with Councilwoman Catherine Kent voted against approving Triple Five as “qualified and eligible,” said before voting she did not believe the town had been given adequate information on which to base a decision. Jens-Smith has reiterated that objection in the year since the vote. During her campaign for re-election this year, she has called for Triple Five to provide updated financial information, citing the company’s many other ongoing projects — even before the $5 billion Saudi project was made public.
“It’s one of our biggest assets, so it’s imperative that we know the buyer has not only the money to buy the property but also to develop it,” Jens-Smith said in a debate hosted by RiverheadLOCAL this week. “They never really produced their financials. It was a big bone of contention for me.”
Her opponent Yvette Aguiar says the company “has trillions of dollars in the bank.” She also said the contract of sale doesn’t require Triple Five to provide updated financials.
Triple Five is “leveraged everywhere,” Jens-Smith said in an interview today after being informed of the Saudi project.
In addition to the American Dream project in New Jersey, they have announced a $4 billion retail and entertainment complex in Florida dubbed American Dream-Miami. While Triple Five gained crucial approvals for the Miami deal in 2018, the company has not yet filed a site plan application there. Triple Five is also involved in the development of the Mall of China and last year announced interest in developing an entertainment-casino-retail complex in Spain.
Triple Five took over the New Jersey project, formerly known as Xanadu, in 2011, after two other developers failed. The company originally announced a 2013 opening, but the opening was pushed back several times. The opening last week did not include any retail stores or restaurants, which are now slated to open in March.
In August, the Minneapolis Star-Tribune reported that Bloomington, Minnesota officials were distressed to learn that Triple Five had put up a 49% stake in the Mall of America to secure $1.1 billion in bonded financing for the American Dream project in New Jersey.
According to the bond document, Triple Five gave a 49% stake in both the Mall of America and its flagship West Edmonton Mall in Edmonton, Alberta, where Triple Five is headquartered.
The $1.1 billion bond sale, completed in June 2017, was arranged by Goldman Sachs and JP Morgan Chase to finance construction of the 3-million-square-foot American Dream complex. The unrated bonds were sold by the Wisconsin Public Finance Authority. The bond document included some 30 pages describing the “substantial risk” of the investment for a variety of reasons, including the decline of brick-and-mortar retail, the site’s proximity to New York City and Bergen County, New Jersey’s prohibition against retail sales on Sundays.
The $1.1 billion dollar bond sale was in addition to a previously closed $1.67 billion construction loan.
The developer’s equity investment in the project was $548 million, or 19% of the total estimated construction cost. According to the bond document, a “legacy lender” member of a limited liability company — one of 11 Triple Five affiliates involved in the American Dream project, according to the bond document — has a $498.6 million equity interest in the deal.
When the Star-Tribune article was published in August, Riverhead Town officials said they were not aware that Triple Five had put up a 49% stake in each of its premier mega-mall properties in order to secure financing for the Meadowlands project.
But the 1,126-page bond document describing the arrangements for the June 2017 bond offering was provided to the Town of Riverhead in March 2018 and is posted on the town website.
Despite having the bond document in the town’s possession as of March 2018, both Jens-Smith and Councilman Tim Hubbard — who cast the deciding vote in the “qualified and eligible” approval last November — said this week they were not aware of Triple Five leveraging both mega-mall properties when they voted on the “qualified and eligible” application a year ago. Both said the town’s outside lawyers had not brought it up to the town board during the “qualified and eligible” vetting process.
The controversial no-bid deal was approved in a 3-2 split vote by a lame duck town board in December 2017. The contract approved by the board in its last meeting of the year — and the last meeting for two of the three board members who voted to support it — was subject to a determination that the buyer is “qualified and eligible” to purchase and develop the site in accordance with a reuse plan adopted by the town under the state Urban Renewal Law. After a drawn-out process that spanned more than eight months, the town board last November voted to determine Calverton Aviation and Technology “qualified and eligible.”
Again, the board was split 3-2. This time, two members who voted against the contract in December 2017 — council members Hubbard and Jodi Giglio — voted to support the qualified and eligible determination. Jens-Smith and Councilwoman Catherine Kent — who both took office last January and opposed the deal in their election campaigns, voted against the approval.
Hubbard said this week he remains “very confident” Triple Five has “more than enough money to do what they’re planning to do at EPCAL.”
He said “it’s evident that they can get the financial resources they need even if from their own businesses.”
The company’s plans for the Calverton site will bring high-paying jobs and tax base to Riverhead, which is what was intended when the federal government deeded the 2,900-acre former Grumman manufacturing plant to the Town of Riverhead in 1998, according to Hubbard and other supporters of the Calverton Aviation and Technology plan.
The survival of local journalism depends on your support.
We are a small family-owned operation. You rely on us to stay informed, and we depend on you to make our work possible. Just a few dollars can help us continue to bring this important service to our community.
Support RiverheadLOCAL today.
