JPMorgan Chase – Lenders ‘Likely’ To Take 49% Stake In Mall Of America, West Edmonton Mall
A pair of the biggest malls in North America could be turning over ownership stakes to lenders, the latest retail properties whose financial positions are permanently altered because of the unprecedented challenges posed by the coronavirus pandemic.
Courtesy of Triple Five Group
A partial rendering of Triple Five Group’s American Dream Meadowlands mall, current as of May 2019
Faced with billions of dollars in debt and months without any cash flow, Triple Five Group could soon be forced to give lenders substantial ownership stakes at Mall of America in Bloomington, Minnesota, and the West Edmonton Mall in Canada to cover debt at its newest project, the American Dream mall in East Rutherford, New Jersey, CoStar reports.
Triple Five Group, the Canadian, family-owned company that developed all three of the malls in question, took out a $1.67B loan with JPMorgan Chase and Goldman Sachs to finance construction of American Dream as the development of the project hit several delays, CoStar reported in 2019. As collateral for the loan, Triple Five offered 49% ownership stakes in Mall of America and the West Edmonton Mall.
Hagen told the council that JPMorgan and Goldman Sachs will “likely” take the interests in the two established malls to recoup what Triple Five has failed to pay in debt service, though they have yet to do so, CoStar reports. The real estate attached to Mall of America and West Edmonton Mall is not included in the collateral deal, which only applies to the two centers’ operating business entities.
American Dream had only opened some of its entertainment portions by the time health and safety protocols forced it to close completely for six months, causing a staggering cash flow issue for Triple Five as it needed to repay a total of nearly $5B in debt.
“From a financial perspective, it would have been much better if American Dream had burned down or a hurricane would have hit it,” Mall of America Senior Vice President of Development Kurt Hagen told Bloomington City Council as part of a plea for government assistance, CoStar reports.
An entrance to the Mall of America in Bloomington, Minnesota, as of 2018
Mall of America was in danger of foreclosure in the early days of the pandemic before reaching a deal with lenders, while support from the Canadian government has kept the West Edmonton Mall from falling behind on debt payments. As far as American Dream is concerned, the debt issues go beyond those with JPMorgan and Goldman Sachs.
Multiple township governments in New Jersey have claimed that Triple Five is not current on payments it owes as part of various tax incentive deals secured during the construction of American Dream, CoStar reports. Several contractors have joined to sue Ameream, the subsidiary of Triple Five that owns American Dream directly, for $41M over alleged missed payments for construction work, NJ.com reports.