According to court filings, American Dream, Triple Five’s $5 billion mall and entertainment complex in New Jersey, has been hit with a $389 million lawsuit by lenders claiming the borrower defaulted on its payment obligations in May 2021.
On February 6, the Singapore-based agent for a group of lenders that issued loans totaling $300 million to a Triple Five affiliate firm in August 2019 filed action in New York County State Supreme Court. The lawsuit seeks restitution of the $300 million principal plus $89 million in accrued interest. Bloomberg was the first to announce the file last week.
The loan agreement between Triple Five and the lenders stipulated monthly interest-only payments. According to court filings, the borrower failed to pay the total amount due in May 2021 and then halted all payments.
According to documents in the court file, including the notice of default and loan agreement, nine members of the Ghermezian family individually guaranteed the debt. Among them was Nader Ghermezian, a familiar figure in Riverhead, where he has represented his family-owned businesses in Triple Five’s $40 million land transaction with the Town of Riverhead.
According to court filings, the loans were also guaranteed by the Triple Five firms that own the family’s two mega-malls, the Mall of America in Minnesota and the West Edmonton Mall in Edmonton, Alberta, Canada.
Gary Lewi of Rubenstein Communications responded to a request for comment addressed to Triple Five’s chief operations officer, who was designated as the contact for the borrower on the loan agreement. Lewi told RiverheadLOCAL in an emailed comment, “I have been informed that the case you cite has no bearing on the firm that is acquiring the Calverton property.”
The $300 million loans were “junior” to “senior” construction financing totaling $1.67 billion received in 2017 by other Triple Five affiliates. The Wall Street Journal claimed that in 2020, Triple Five Group defaulted on the senior debt backed by a 49 percent interest in both the Mall of America and the West Edmonton Mall.
American Dream got $800,000,000 in public funding via PILOT revenue bonds issued by the State of Wisconsin Public Finance Authority in 2017.
According to the 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, which was struggling to open the long-delayed mall when COVID-19 shut everything down in March 2020, lost over $64 million in 2020 and over $59 million in 2021 on the project.
The Triple Five companies connected with the American Dream mall are part of a vast complex of single-purpose entities owned by Triple Five and, ultimately, the Ghermezian family.
One of these hundreds of entities is involved in the Calverton real estate transaction. Triple Five Real Estate I owns the controlling interest and is the managing member of Calverton Aviation and Technology, a joint venture with Luminati Aerospace that has a $40 million purchase agreement with the Town of Riverhead to acquire 1,644 acres of vacant industrial land in the Calverton Enterprise Park.
The contested land transaction was approved by the town council in 2017 and signed in 2018 after a months-long “qualified and eligible sponsor” screening.
The town was unable to finalise the transaction because it was unable to subdivide the land required to establish individual lots to transfer to CAT. The development was halted because the State Department of Environmental Conservation refused to authorise the Riverhead Water District as the public water provider for undeveloped areas of the land. A lawsuit filed by the municipality against the State DEC in 2021 was dismissed by the court as premature.
The town and CAT agreed on an alternative method to finalise the deal last year. The town and CAT agreed to submit a joint application to the Riverhead Industrial Development Agency for tax abatements and other tax exemptions for CAT. Last March, the Town Council authorised a formal agreement with CAT to implement the revised plan.
In September, the application was submitted and accepted by the RIDA. If approved by the RIDA, the town will surrender all of its land holdings to the agency, and CAT will pay the remaining purchase price to the town. CAT will next pursue the subdivision stated in the sales agreement. Upon receiving subdivision permission and filing the final map, RIDA will transfer to CAT the title to the 1,644-acre lots. The RDA will give the town any leftover lots that are already in municipal use or are protected territories.
CAT presented its most recent development plans to the RIDA at its board meeting on September 21. Its officials informed the RIDA board that CAT will construct 10 million square feet of industrial and commercial space along the two runways included in the deal.
The submitted plans include 8.24 million square feet of multilevel distribution and logistics buildings located along the runways, as well as a single-story rail distribution structure measuring 400 thousand square feet. To handle cargo planes, new aprons will be constructed adjacent to the distribution and logistics facilities on both runways, and new taxiways will connect the aprons to the runways.
The plans also depict 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 described by CAT attorney Peter Curry during his presentation to the IDA in September.
Also envisioned are two parking structures, each measuring 4.32 million square feet and providing 4,320 parking places. It appears that more surface parking spaces are displayed surrounding “flex” structures.
Phased construction would reach 10 million square feet in total area.
James Farley, the chairman of the Riverhead IDA, and Tracy Stark, the executive director, could not be reached for comment this afternoon.
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