Triple Five Group, which owns the Nickelodeon Universe amusement parks at its Mall of America and the new American Dream mall in New Jersey, has missed the last two monthly payments on its $1.4 billion mortgage for the Mall of America property. The Bloomington, Minneapolis-area mall - the biggest in the United States - has been closed since March 17, though it is scheduled to reopen on a limited basis on June 1, with Nickelodeon Universe remaining closed until the state approves those types of businesses to reopen. The company is asking the state of Minnesota for a forgivable loan to help it make its debt payments.
Many shopping mall operators were struggling before the COVID-19 (coronavirus) pandemic, as "brick-and-mortar" retail suffered under competition from online sales and indoor malls fell out of favor. The pandemic will be the killing blow for many retail chains, such as mall stalwart Pier 1, which recently announced its closure. With many stores unable to pay rent while closed, leveraged mall developers can't make their payments, either.
Triple Five was opening its new Nickelodeon Universe at American Dream, starting with its first rides last fall. The incomplete park didn't immediately hit with fans, but Triple Five was hoping for a bigger response following an official opening of the park and the surrounding mall this spring. That didn't happen because of the pandemic.
The New Jersey park features the record-setting TMNT Shellraiser roller coaster - a Gerstlauer Euro-Fighter that offers the world's steepest drop at 121.5 degrees. Other coasters at the indoor park include Shredder - a Gerstlauer spinner, and Sandy’s Blasting Bronco - an Intamin launch coaster that has yet to debut.
From Patch:
Owner Of American Dream Missed Two Mortgage Payments: Reports
Triple Five put up Mall of America as collateral to take out a loan for American Dream, and missed its April and May mortgage payments.
SECAUCUS, NJ — The owner of American Dream mega-mall has missed two mortgage payments to the bank, according to a June 2 report in the Bergen Record and CNBC.
American Dream is owned by Triple Five (the Ghermezian family), the same family that owns Mall of America in Minnesota.
In fact, Triple Five put up Mall of America as collateral to take out a loan for American Dream, according to the news reports.
Triple Five missed two payments for its $1.4 billion mortgage for Mall of America. The bank that owns the mortgage, Wells Fargo, confirmed to the Bergen Record that Triple Five missed its April and May payments.
It is an incredibly tough time to be in the mall business, much less open a brand-new mall. American Dream just opened last fall, but only in a tentative fashion: Only the Nickelodeon theme park and indoor ski mountain opened.
In fact, many of American Dream's store spaces had not even been rented and much of the mall was vacant even while families flocked to the theme park. American Dream was able to get one large-scale retailer in, European discount store Primark, and they were set to open this spring. But Primark had to suspend operations due to the pandemic.
Neither American Dream or Mall of America have reopened yet.
Triple Five CEO Don Ghermezian told CNBC in April: "The difficulty we are going though now ... if tenants don't want to pay rent, my response is: 'I have got to pay a mortgage. I borrowed money. I have got to pay back my lenders.'"
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From Bloomberg Quint:
Mall of America Said to Miss Another Payment on Mortgage Debt
(Bloomberg) -- Minnesota’s Mall of America missed another payment on a $1.4 billion mortgage, putting the borrower more than 60 days delinquent, according to people with knowledge of the financing. The mall, one of the largest shopping centers in the U.S., didn’t make its roughly $7 million debt payment for June, according to the people, who asked not to be named speaking about a private matter. It was the third straight month of missed payments for the property.
Triple Five Group, the company that owns the mall, didn’t reply to requests for comment. The 5.6-million square-foot complex, which features 500 stores, partially reopened June 10 with reduced capacity at restaurants and movie theaters. An indoor theme park, Nickelodeon Universe, remained closed to comply with health directives, according to its website.
Mall of America is one of North America’s three largest shopping centers, all owned by the Ghermezian family. The properties face financial challenges as coronavirus infection precautions depress the lure of experiential attractions, such as theme parks, and brick-and-mortar retailers lose market share to online competitors.
Mall landlords have struggled to collect rent from shuttered retailers, adding to the financial pressure in the industry.
The West Edmonton Mall, the first mega shopping center developed by the Armenians in the 1980s, began gradually reopening in May.
The Ghermezians’ American Dream, a megamall in the New Jersey Meadowlands with an indoor ski slope and water park, has not yet fully opened. The developer’s construction costs for the project surpassed $2 billion, up from an original 2015 estimate of $1.55 billion, according to a recent report by CBRE Group Inc.
The Ghermezians pledged 49% of their equity interests in the West Edmonton Mall and Mall of America as collateral to finance the American Dream.
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Update (8/20) - From StarTribune:
Mall of America, behind on its mortgage, reaches deal to avoid foreclosure
The mall's owner has been several months late on the $1.4 billion mortgage for the megamall.
Mall of America in Bloomington has been behind on its mortgage payments since the temporary closure due to pandemic mandates.
The owner of the Mall of America continues to be months behind on its mortgage payments and has entered a cash management agreement to avoid foreclosure.
MOA’s owner, Triple Five Group, started having trouble meeting the mortgage after the mall had to closed in March due to state-mandated efforts to curb the spread of coronavirus.
The loan was transferred to special servicing in May after the mall owner, Canada-based Triple Five, was no longer making full payments. At the time, a mall representative said revenue had fallen 85%.
Now the special servicer has entered into a cash management agreement with Triple Five requiring increased reporting requirements and monthly remittance of net cash, according to a report issued Tuesday by data firm Trepp.
The special servicer, CWCapital Asset Management, could not be reached on Wednesday.
Mall of America’s collateral value, which was $2.3 billion in 2014, has decreased to $1.9 billion, according to Trepp.
Malls across the country have uphill mountains to climb as they deal with struggling tenants, several of which have filed for bankruptcy in recent months or can’t afford full rent payments because of COVID-19 restrictions.
Trepp’s report shows MOA’s loan was paid through the month of April, showing payments on the $1.4 billion mortgage remains three months delinquent.
The mall reopened in June and is slowly getting back to normal with the majority of its stores and its indoor theme park Nickelodeon Universe currently open. Tenant rent collections have climbed from 33% in April and May to 50% in July, according to Trepp.
MOA’s finances are complicated by its owner’s other projects as well.
Triple Five pledged a 49% stake in the Mall of America for its American Dream megamall in East Rutherford, N.J., which hasn’t been able to fully open.
Despite the issues, retail experts said they expected lenders to work together with Triple Five on a solution for the Mall of America.
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More Nick: Nickelodeon Upfront 2020 Roundup!
Originally published: Tuesday, May 26, 2020.
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