Gov. Phil Murphy still believes in the American Dream.
And reports of the Rutherford megamall’s developers losing equity in other North American sites over their failure to repay a construction loan doesn’t appear to have shaken the governor’s faith.
“It’s an extraordinary concept, notwithstanding the fact that ecommerce, which already had a lot of momentum before the pandemic, has picked up even further,” Murphy said at Wednesday’s virus briefing. “I still think there’s a place for something that is as experiential as this thing is to go to.”
The Financial Times last week reported a group of lenders who helped fund construction of the site would take 49% ownership stakes in two other malls owned by American Dream developer Triple Five.
The step is the latest in a series of misfortunes suffered by the long-troubled project, which billed as a jobs and tourism mecca that will include an indoor theme park, water park and ski slope, among a slew of other amusements and retailers.
After nearly two decades of development that saw ownership of the project repeatedly change hands, the American Dream finally began to open in October 2019, but like most other businesses in the state, the mall was shuttered by the pandemic.
It remained closed for nearly a year, until it reopened on Oct. 1, 2020. With its doors shuttered and its tenants not paying rent, the mall’s finances took a sharp downward turn, and it doesn’t appear as though New Jersey’s government is prepared to step in, again, and pick up the slack.
While New Jersey has in the past given the mall roughly $1.2 billion in direct aid and tax incentives, Murphy on Wednesday suggested the state wasn’t immediately moving to bail out the struggling facility.
“I’m not aware of any state, further state — I should say further, because the state as you know at the beginning of this, long before I got here, was very involved — but I’m not aware of any other financial discussions as it relates to us,” he said.
It’s not clear what the facility’s future will look like. NJ Advance Media in early March reported an aquarium and a Legoland Discovery Center would open there in May, and the mall remains operational despite some tenants pulling out or going bankrupt amid widespread business closures last year.
“They still believe it is a big tourist attraction, and my guess is, at a normal time, they’re probably right. I really could see somebody going there as a destination,” said Murphy, adding his team was in regular contact with mall officials.
The mall’s latest troubles don’t spell out its impending doom. Per the Financial Times report, the American Dream’s mortgage lenders have allowed the firm to pay down interest only until the loan matures, and the equity swap won’t reduce Triple Five’s ownership of the American Dream.
The lenders are gaining equity in the Mall of America and the West Edmonton Mall in Canada. The developer put those shares up as collateral for a $1.2 billion construction loan in May 2017.