A subsidiary of Triple Five, the international conglomerate in a massive land deal with the Town of Riverhead, is under scrutiny as it struggles to complete and fully open the $5.7 billion “American Dream” megamall in East Rutherford, New Jersey.
The Triple Five company developing the 3-million-square foot mall has been put on notice by its bond servicer that it has not fulfilled its disclosure obligations under a grant agreement with the New Jersey Economic Development Authority.
The company’s continued “breach of its obligations” under the grant agreement could result in a redemption of bonds issued to finance construction of the mall, according to a Jan. 18 letter from bond servicer Trimont Real Estate Advisors to Ameream LLC, the Triple Five company developing the mall.
The Trimont letter was disclosed last week in a securities filing online by the trustee for the Public Finance Authority, which issued $800 million in bonds in 2017 as part of a complex financing arrangement with New Jersey economic development agencies. The filing was first reported by Bloomberg News Feb. 3.
The trustee, U.S. Bank National Association, also disclosed that Ameream has drained its debt service reserve by twice making an “unscheduled” draws on the reserve to make nearly $18.6 million in debt service payments due Aug. 1 and Feb. 1. After the second draw, there was $820 left in the debt service reserve, the trustee disclosed in the notice.
In its Jan. 18 letter to Ameream, bond servicer Trimont said Ameream had provided Trimont with “minimal information despite specific requests” for additional items “reasonably necessary to accurately track and understand certain aspects of the project’s performance” which could “directly impact” the credit of the debt.
Ameream told Trimont in March 2021 that an auditor had already been employed to complete a required project cost statement, but the statement had not yet been submitted as of Jan. 18, Trimont wrote. “Further, despite continued requests for updates on the progress of this process, none have been provided,” Trimont wrote.
Image: AmericanDream.com
According to consolidated financial statements of the Triple Five subsidiaries involved in the development of the New Jersey megamall, the company lost over $64 million on the project in 2020.
In 2020 Triple Five defaulted on a $1.67 billion construction loan which was secured by a 49% interest in each of Triple Five’s two other mega malls, Mall of America in Bloomington, Minnesota and West Edmonton Mall in Alberta, Canada. The company also defaulted on its $1.4 billion mortgage on the Mall of America property in 2020, missing months of payments. It later reached a deal with lenders to avoid foreclosure and the loan was made current as of December 2020.
A leasing status update filed by Ameream last month states that the American Dream project was 77% leased as of Jan. 1.
Since Triple Five Group is a privately held company, the full impact of its financial troubles with the New Jersey development is not clear.
The Triple Five companies involved in American Dream are among a sprawling conglomerate of commercial entities owned by Triple Five Group.
Among those hundreds of entities is one involved in the Calverton land deal. 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, that is in contract with the Town of Riverhead to buy 1,644 acres of vacant industrial land at the Calverton Enterprise Park for $40 million.
Triple Five chairman Nader Ghermezian told the town board last June that, 2020’s financial news notwithstanding, the company is ready and able to close on the land deal immediately — as soon as the town is able to fulfill its obligations under the contract.
The Calverton land deal has been mired in controversy from the beginning, from the 11th-hour approval of a purchase agreement by a lame-duck town board at its last meeting in December 2017, to the 3-2 decision of the town board in 2018 finding Calverton Aviation and Technology “qualified and eligible” to buy and develop the site under the town’s urban renewal plan, despite the purchaser’s refusal to provide full financial disclosure to the town.
The contract of sale requires the town to subdivide the land into eight lots, but the State Department of Environmental Conservation has effectively blocked the subdivision process by requiring the town to resolve its regulatory issues with the agency — mostly over public water supply questions.
A lawsuit brought by town against the State DEC was dismissed in court last year as premature.
The deal remains stalled, though Riverhead Supervisor Yvette Aguiar has made statements in recent radio interviews that the stalemate would soon come to an end.
On Jan. 4, she told WRIV host Bruce Tria, who asked if it was “time to cut bait and cancel this deal,” that in “two to three weeks we’re going to be making an announcement.” The town is “taking a new direction,” Aguiar said, “and we’re going to be moving forward very soon.” She did not provide specifics.
On Feb. 1, during another radio interview on WRIV, Aguiar said there would be no news for another month because “it’s a contract so it’s a very difficult situation and we don’t want to tie up the property in court.” She said the town’s attorneys wanted a few weeks extra. “So hopefully by the end of February we’re gonna speak to the board and look at all our options and let the board make a decision on it.”
Asked to elaborate on her recent on-air statements, Aguiar said in an email yesterday the town is currently looking at its options.
“I am looking at all legal possibilities to move the EPCAL contract forward or to terminate as soon as possible,” Aguiar wrote. “As you know, at the moment it is a legal matter. One fact is certain, the DEC refuses to provide the Town with the subdivision and without it, we cannot sell the property to anyone, including CAT. In addition, the Suffolk County Water Authority is making claim to service EPCAL when in fact, we have a Water Distict and plenty of water. Again, we are currently looking at the legal options we have to deal with these complex legal issues. We hope to have a path forward very soon,” she wrote.
Asked if she is satisfied with the financial disclosure CAT has made to the board, including financing information it provided to the town’s outside legal counsel last year on the condition that it not be disclosed to the town board, Aguiar said “it is not relevant” because the town is “not able to subdivide and close on the property at this time.”
“The entire Town Board will decide the future of the contract based upon all of the relevant information available and advice of legal counsel,” Aguiar wrote.
“However, if we can resolve the many issues that prevent us from subdividing the property and closing, I will ensure there will be a full financial vetting process, which will ultimately determine whether the Town Board decides to go forward,” she added.
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