- The American Dream mega mall in East Rutherford, NJ, was reassessed at $2.5B—down from $3.3B—jeopardizing PILOT-backed bond repayments.
- The complex’s $48.4M annual payment fell short of its $54.1M debt service, requiring withdrawals from bond reserves to cover the gap.
- If the mall’s ongoing tax appeals are successful, future PILOT payments may shrink further, increasing the risk that bondholders won’t be repaid in full.
A Big Hit To Valuation
The 3.5M SF American Dream entertainment and retail complex—home to an indoor amusement park, water park, and ski slope—was recently reassessed by East Rutherford at $2.5B, reports Bloomberg. That’s an $800M drop from its previous $3.3B valuation, posted to the Municipal Securities Rulemaking Board’s EMMA platform.
Financing Framework Under Pressure
New Jersey supported the $5B project with $1.1B in tax-exempt bonds, including $800M backed by PILOT revenue. These payments were meant to equal 90% of property taxes, but the revised valuation now puts the mall’s expected annual PILOT payment around $36.5M —well short of the required $54.1M annual debt service.
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Investor Concerns Grow
With a $27M interest payment due June 1, and only $38M in reserves as of last December, bondholders are increasingly exposed. Reserves have covered shortfalls, but analysts like Lisa Washburn warn bondholders may not recover the full principal.
Trading Outlook And Market Impact
Despite the warning signs, American Dream PILOT bonds maturing in 2050 with a 7% coupon are still trading near par—100.8 cents on the dollar—suggesting some investor confidence remains. Nuveen LLC, which holds close to $700M of the bonds, declined to comment.
Sales Rising, But Far Off Target
Sales at the mall reached $650M in 2024—an 18% increase over the previous year, but still far below the $2B projected in a 2017 feasibility study. Pandemic shutdowns delayed the retail opening by a year, following the mall’s initial launch in October 2019.
Assessment Appeals Cloud Future
American Dream has appealed its tax assessments for 2019 through 2025, citing pandemic-related disruptions. If successful, these appeals could further reduce PILOT revenues and increase the risk to bondholders. Notably, failure to pay interest or principal on time is not considered an event of default under the bond terms.
Looking Ahead
The $800M in PILOT-backed bonds has balloon payments due between 2027 and 2050. If reserves deplete and revenue lags, bond maturity extends to 2056, after which no additional payments are guaranteed. Investors are now watching closely as the complex battles through both legal appeals and financial headwinds.
