American Dream, Triple Five’s troubled $5 billion mall and entertainment complex in New Jersey has been slapped with a $389 million lawsuit by lenders claiming the borrower defaulted on its payment obligations in May 2021, according to court documents.
The Singapore-based agent for a group of lenders that made loans totaling $300 million to a Triple Five-affiliate company in August 2019, filed suit in State Supreme Court in New York County on Feb. 6. The suit seeks repayment of the $300 million principal, plus interest due of $89 million. The filing was first reported by Bloomberg last week.
The loan agreement between the Triple Five company and the lenders called for monthly payments of interest only. According to court documents, the borrower failed to make the full amount due in May 2021 and thereafter ceased making payments altogether.
According to documents in the court filing — including the notice of default and the loan agreement — the indebtedness was personally guaranteed by nine members of the Ghermezian family. Among them was Nader Ghermezian, a familiar face in Riverhead, where he has appeared and represented his family-owned companies in connection with Triple Five’s $40 million land deal with the Town of Riverhead.
The loans were also guaranteed by the Triple Five companies that own the family’s two mega-malls, the Mall of America in Minnesota and West Edmonton Mall in Edmonton, Alberta Canada, according to the documents filed with the court.
Gary Lewi of Rubenstein communications responded to a request for comment to Triple Five’s chief operating officer, who was listed on the loan agreement as the contact person for the borrower. “I have been advised that the litigation you have referenced has no connection to the company that is purchasing the Calverton property,” Lewi said in an emailed statement to RiverheadLOCAL.
The $300 million loans were “junior” to “senior” construction financing totaling $1.67 billion that other Triple Five-affiliate entities obtained in 2017. In 2020, Triple Five Group defaulted on the senior financing, which was secured by a 49% interest in both the Mall of America and the West Edmonton Mall, the Wall Street Journal reported.
In addition to the private construction financing, American Dream obtained $800,000,000 in public financing through PILOT revenue bonds issued by the State of Wisconsin Public Finance Authority in 2017.
According to consolidated financial statements of the Triple Five subsidiaries involved in the development of the 3.5-million square-foot complex in East Rutherford, New Jersey, the company — struggling to open the long-delayed mall when COVID-19 shut everything down in March 2020 — lost over $64 million on the project in 2020 and more than $59 million in 2021.
The Triple Five companies involved in the American Dream mall are among a sprawling conglomerate of single-purpose entities owned by Triple Five and, ultimately by members of the Ghermezian family.
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.
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.
The town has not been able to close the deal because it was unable to complete a the land subdivision required to create separate lots to transfer to CAT. The subdivision was held up by the State Department of Environmental Conservation’s refusal to approve the Riverhead Water District as the provider of public water to undeveloped portions of the site. A lawsuit brought by town against the State DEC was dismissed in court in 2021 as premature.
Last year, the town and CAT agreed on a different approach to finalizing the sale. The town and CAT agreed to make joint application to the Riverhead Industrial Development Agency for financial assistance to CAT in the form of real property tax abatements and other tax exemptions. The Town Board approved a letter agreement with CAT to implement the new plan last March
The application was filed and accepted by the RIDA in September. If it is approved by the RIDA, the town will transfer all of its land holdings to the agency and CAT will pay the town the balance of the purchase price. Then CAT will pursue the subdivision outlined in the contract of sale. Once it obtains subdivision approval and files the final map, RIDA will transfer title to the lots comprising the 1,644 acres to CAT. RDA will remaining lots, which are already in municipal use or preserved lands, to the town.
CAT unveiled its latest development plans to the RIDA at its Sept. 21 board meeting. Its representatives told the RIDA board that CAT will build a total of 10 million square feet of industrial and commercial space along the two runways at the site, which are included in the sale.
MORE COVERAGE: Air cargo logistics hub in Calverton planned by Triple Five affiliate to enhance package delivery services on Long Island
The plans presented depict 8.24 million square feet of multilevel distribution and logistics buildings constructed along the runways, and one 400,000-square-foot single-story rail distribution building. The plans show new aprons adjoining the distribution and logistics buildings on both runways to accommodate cargo planes, and new taxiways that will link the aprons to the runways.
The plans also show three two-story “flex” buildings, set back from the eastern runway, that would house “tenants in the aeronautics, industrial, aviation, environmental, energy…medical (and) educational…fields,” as CAT attorney Peter Curry described the uses during the September presentation to the IDA.
Plans also include two parking structures, each 4.32 million square feet in size and each providing 4,320 parking spaces. Additional surface parking areas seem to be depicted around the “flex” buildings
Total development would exceed 10 million square feet, built in phases.
Riverhead IDA chairperson James Farley and executive director Tracy Stark could not be reached for comment this afternoon.
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