Triple Five, the company in a $40 million deal to buy more than 1,600 acres of vacant land in Calverton from the Town of Riverhead, lost over $64 million last year at its still-unfinished New Jersey mega-mall.
The long-delayed American Dream, a $5.7 billion, 3-million-square-foot retail and entertainment complex in East Rutherford, New Jersey, partially opened in October 2019. The mall was forced to close in March 2020 under pandemic restrictions. It reopened in October.
Consolidated financial statements of Triple Five subsidiaries, made public May 6, show revenues from operations at just over $41.5 million last year, with expenses of more than $105.9 million.
The American Dream financial statements were made public because Triple Five tapped into $800 million in public bonds to help finance construction of the mall. A federal regulatory organization that oversees municipal bond markets published the financial statements on its website.
Last year, Triple Five Group defaulted on a $1.67 billion construction loan at American Dream, which was secured by a 49% interest Triple Five’s Mall of America in Bloomington, Minnesota and West Edmonton Mall in Alberta, Canada, according to The Wall Street Journal. As a result of the default, the construction loan lenders would be able to collect 49% of the rent revenue from both properties, the Journal reported last month.
Triple Five Group, through its wholly owned subsidiary, Calverton Aviation & Technology, is contract to buy nearly all of the town’s remaining vacant land at the Calverton Enterprise Park. The controversial land deal was approved by the town board in 2017 and signed in 2018 after the completion of a months-long “qualified and eligible sponsor” vetting process.
For the past three years, opponents of the deal have urged the town board to demand Triple Five submit financial statements to demonstrate it has the financial means to purchase and develop the site in accordance with the contract of sale. The contract requires Triple Five to develop at least 1 million square feet of commercial and industrial space on the site, mainly for aviation and technology, and to spend no less than $1 million to improve both of the site’s runways during its first two years of ownership.
Triple Five, a privately owned company, has repeatedly declined to submit financial statements to the town, both during the “qualified and eligible” process conducted by the town in 2018 and after the town board in a split vote deemed the purchaser “qualified and eligible.” It did offer to allow an independent accounting firm to review its records on the condition of confidentiality and only if the town picked up the tab — which the town refused.
Triple Five instead submitted, in 2018 and 2020, letters from a public accounting firm stating it has the funds necessary to purchase the site and letters of interest (three in 2018 and one — from a different entity – in 2020) from lenders stating they would consider providing an estimated $120 million in construction financing for the project.
At last week’s town board meeting, Riverhead resident Ellen Hoil, an attorney who is also a Democratic candidate for town assessor this year, questioned Triple Five’s financial standing and what the town is doing to ensure the company is capable of performing its contractual obligations.
Supervisor Yvette Aguiar said the town’s primary concern right now is completing the subdivision of land at the site, not the qualifications of the buyer.
“At the moment, we are pursuing a subdivision. We are not pursuing who’s the individuals who we are contract with. We need the subdivision,” Aguiar told Hoil. “If we don’t have a subdivision, we can’t move further. And right now, as you know, we are having some difficulties with the Suffolk County Water [Authority] and the DEC,” Aguiar said.
The town’s subdivision is stalled by issues at the State Department of Environmental Conservation, which must approve environmental permits before the subdivision can be finalized. But the DEC determined that the town’s permit application is incomplete. Among other things, the DEC says the Suffolk County Water Authority, not the Riverhead Water District, has the right to provide public water to the subdivision inside the enterprise park and is requiring Suffolk County Water Authority to provide a waiver before the town’s application can move forward. The water authority has refused its consent.
“There is a provision in the contract that states that we have to make every diligent effort to obtain the subdivision,” she said. Thereafter, the town can turn its attention to Triple Five’s ability to perform under the contract, according to Aguiar.
Councilwoman Catherine Kent questioned whether the town should be moving forward with a subdivision “tailored” for Triple Five when it doesn’t know if the company will be able to perform its obligations under the contract.
“We don’t even know for sure that this is going to be the ultimate buyer because we’re not bringing them in and checking on their finances,” Kent said.
Aguiar said the town has no choice but to pursue the current subdivision because the contract with Triple Five requires it, faulting former supervisor Laura Jens-Smith for signing what she called “one of the worst contracts I have ever seen.”
The contract was approved in December 2017, just before Jens-Smith took office after she defeated then-incumbent supervisor Sean Walter. In a 3-2 vote, the lame duck town board approved the contract, subject to the board’s determination that Triple Five, whose identity as the buyer had just been revealed to the public, was “qualified and eligible” as required by state law.
Since the town failed to obtain final subdivision approval by a contract deadline, either party can now cancel the deal — and critics have demanded that the town pull the plug. But an attempted termination could have consequences.
“We don’t want to tie up this property in court for five years,” Aguiar said.
Aguiar said the town can still examine the buyer’s financial statements prior to closing, claiming that the contract states the town can conduct a “forensic audit” of the buyer before closing. The contract, however, does not contain any language about an audit of any kind, or even suggest the town can verify Triple Five’s financial ability to perform the contract terms prior to closing.
Kent repeated her request that the town board ask Triple Five come in and discuss their updated financials.
Aguiar told Kent she agreed that the town “should look at the finances when we figure out what’s going on with the DEC… and the Suffolk County Water. We are still pursuing it and regardless of where we stand, we still have to complete the subdivision,” she said.
Hubbard agreed that the financial capabilities of Triple Five should be reevaluated by the town. “Bring them in. Let them come in,” he said.
Aguiar agreed to ask Triple Five to come in to meet with the board. We can bring them in, that’s a great idea,” she said. “And that’s not going to change us pursuing the court case or having to pursue the subdivision,” she said.
“Things have certainly changed since the meeting we had to determine them qualified and eligible,” Hubbard said. That is an absolutely correct assessment. So it’s something we have to look at as a board,” he said.
“They may not be able to do this at this point in time,” Hubbard said. “And I think if we can find that out, then we don’t have to spin our wheels going in a certain direction right now. We have to get the subdivision. I’m not saying we don’t. But I think it gives us other options to look at. And it doesn’t necessarily have to be the nine-lot or eight-lot subdivision, it could be something different,” he said. “But regardless, we’re far away from anybody taking title to that property.”
Councilman Ken Rothwell said Triple Five’s financial condition “has not in any way slowed us down.” Once the land is subdivided it could “go to any buyer at that point.”
Correction: Due to an editing error the last five paragraphs of this article were deleted prior to its initial publication. This article has been edited to restore the paragraphs that were inadvertently cut.
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