Triple Five’s Mall of America is delinquent on its $1.4 billion mortgage, seeking financial relief

The Mall of America, owned by Triple Five Group, which is in a pending $40 million land deal with Riverhead Town, is delinquent on its $1.4 billion mortgage.

The owner of the Mall of America missed its April and May payments, according to a May 20 report in the Financial Times, citing documents prepared by Wells Fargo & Co. Wells Fargo & Co. is trustee of the debt and the master servicer for the loan. The borrower notified Wells Fargo & Co. of “COVID-19 related hardships,” according to a May 21 Bloomberg report.

The mall, a more than 2 million-square-foot complex in Bloomington, Minnesota and the largest mall in the United States, has been shuttered since March 17. It is planning to reopen June 1.

In a statement issued yesterday, Mall of America said the COVID-19 pandemic has caused an 85% reduction in its revenues.

“That lost revenue has impacted our ability to stay current on our operating expenses… Facing significantly reduced revenues, and the realization that it will take many months to return to pre-COVID operating levels, we have not met our full mortgage payment obligations,” the company said in a statement.

Triple Five asked the State of Minnesota for relief last month and a proposal to allow forgivable loans from special tax funds is pending in the state legislature. The City of Bloomington opposes the proposed legislation. The Bloomington city manager wrote in a May 12 letter to state lawmakers, “We simply have no assurance or confidence that a loan will help the long-term viability of the project.”

Triple Five also owns the West Edmonton Mall, a megamall in Alberta, Canada, where the company is headquartered. The Canadian province is now emerging from a partial shutdown in response to the coronavirus pandemic. The mall shut down all attractions, but curbside retail service was allowed to continue. It opened its doors again last week.

Triple Five was in the process of completing its third mega-mall in North America, American Dream at the Meadowlands in East Rutherford, New Jersey, when the coronavirus crisis struck. The company, which took over the site in 2013, is the third developer on the long-stalled project.

The company put up a 49% stake in each of its two mega-malls to secure a $1.67 private construction loan for the New Jersey project in May 2017.

In June 2017, Goldman Sachs completed a $1.1 billion bond sale for the construction of the the 3-million-square-foot American Dream complex. The unrated bonds were sold by the Wisconsin Public Finance Authority.

American Dream had opened a handful of attractions and “little more than a dozen” of its planned 350 stores had received occupancy permits, according to NorthJersey.com, when the mall announced it would close the complex and postpone its March 19 opening celebration due to the COVID-19 pandemic.

Ameream LLC, the Triple Five company that owns the American Dream site, said in a statement filed with the its 2017 bond issuer, that as of April 1, the American Dream Project is approximately 90% leased.

In a project status report filed April 1, construction risk management firm CRBE Inc. said construction by the developer was halted due to the COVID-19 outbreak as of March 23 and the impact of the COVID-19 outbreak on its schedule had not been assessed.

“Disruptions associated with the outbreak may include material delivery delays, labor shortages, and administrative delays and the delays will likely result in unanticipated costs,” according to the report.

Ameream failed to provide annual audited financial statements for 2019, according to a notice filed with the Public Finance Authority by the bond issuer’s trustee. Ameream is required to file the financial statements within 120 calendar days following the end of each fiscal year.

Ameream is one of three wholly owned subsidiaries of Meadowlands Joint Venture LLC, a Delaware limited liability company formed in May 2013 to acquire, operate and manage the development of the Meadowlands site.

The companies are among a sprawling conglomerate of commercial entities owned by Triple Five Group.

One of those entities, Triple Five Real Estate I, owns a controlling interest and is the managing member in Calverton Aviation and Technology, a joint venture with Luminati Aerospace. Calverton Aviation and Technology is in contract with the Town of Riverhead Community Development Agency to buy 1,644 acres of vacant industrial land at the Calverton Enterprise Park, a former Navy industrial plant operated by Northrop Grumman.

The site is in a designated Urban Renewal Zone and state law required the town to determine CAT to be “qualified and eligible” to purchase and develop the land in accordance with the town’s adopted urban renewal plan.

The town board made the determination that CAT was “qualified and eligible” in November 2018, following a public hearing on held in two sessions in February and March of that year. The decision by a board split 3-2 in favor, was a controversial one. Objections raised by dissenting board members and members of the community included the board’s failure to require disclosure of financial statements by CAT’s member companies and principals.

The town’s own rules for determining if an entity is “qualified and eligible,” adopted pursuant to State Urban Renewal Law, require the decision to be based on criteria that include the applicant’s “demonstrated ability to finance the acquisition and development of specific project proposed, including the review by the CDA of pro forma financial statements for the proposed project, including sources and uses of funds, certified personal and corporate financial statements of the applicant sponsor, financial commitments of participating lenders, proposed security for the project, business plans and economic analysis of the project and past compliance with municipal laws, rules and regulations.”

Dissenting board members and critics of the decision complained that the town failed to meet its own standards.

Calverton Watch, a coalition of community and environmental groups, has asked the town to terminate the contract of sale, which a majority of the town board opposes, or reopen the “qualified and eligible” process to re-examine the purchaser’s financial means in light of the crushing economic impacts of the COVID-19 crisis.

The town asked CAT for “updated financials” and CAT responded to the request with a letter of interest from a private lender concerning a possible $120 million construction loan and a letter from a business development and investment company stating its intention to work with CAT to create an aviation and technology hub at the site.

EPCAL Watch is calling for “a professionally credible independent audit” of the Triple Five and Luminati principals. The deal “cannot go forward with the sale of [the town’s] greatest asset on speculation,” group coordinator Rex Farr said this week. The letters submitted by the purchaser are not sufficient, he said.