In the age of convenient online shopping and lightning-fast same-day delivery, what American consumers truly desire is a trip to a 3-million-square-foot shopping and entertainment center, right?
That was apparently the mindset behind New Jersey's American Dream Megamall, which, less than two years after its opening, is now saddled with billions in debt.
Let's Not Go To The Mall Today
Since construction broke ground on a 200-acre plot of New Jersey wetlands in 2004, ownership groups have passed around the American Dream Megamall like a family sized Cinnabon. The mall currently resides in the portfolio of the Ghermezian family, who also own Minnesota's massive Mall of America (among others). Through their company Triple Five Group, the family acquired the still-under-construction American Dream Megamall in 2013 after lenders seized it from the previous owner. The New Jersey landmark finally opened its doors in October of 2019.
Now, less than two years since its grand opening, even the bonafide mall moguls haven't been able to keep the shopping and entertainment center afloat:
- Through the first two fiscal quarters of 2021, sales at American Dream stores have tallied $139 million — a measly sum compared to the $2 billion per year in sales a study had projected the mall would generate.
- The Ghermezian family has hired legal and financial advisors to help navigate a debt load that has ballooned to roughly $3 billion. Meanwhile, their lenders — including Goldman Sachs, JP Morgan, and Soros Fund Management — could face losses of $1.7 billion.
The family once believed American Dream could transcend the "shopping mall" designation to become a tourist destination in its own right, investing in a full-fledged waterpark and year-round indoor ski slope. The reality became a tough sell to tourists when New York City — TripAdvisor's number one ranked tourist destination in America — is literally less than ten miles away.
Everything Must Go: The ongoing failure of the NJ megamall has forced the Ghermezian family to forfeit to lenders large swaths of their mall empire, including 49% stakes in both the Mall of America and Canada's West Edmonton megamall. Even moguls need a rainy day fund.
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August 20, 2021 at 08:00AM
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