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American Dream Meadowlands bonds interest rate set as revival looms

NorthJersey.com

Construction workers have returned to American Dream

Construction workers have returned to American Dream Meadowlands. (Photo: Anne-Marie Caruso/NorthJersey.com)

In another key step before revival of the American Dream Meadowlands project is assured, the interest rate for investors on more than $1 billion in bonds was set on Wednesday. That sets the stage for formal bond purchase agreements to be signed on Thursday or Friday.

Bondbuyer.com Contributing Editor John Hallacy said that the largest portion of the $1.15 billion high-yield bond package has an effective yield of 6.625 percent, with virtually the entire package being tax-exempt.

The final closing on a financing package that also includes $1.6 billion in private financing is expected late next week — setting the stage for full-scale construction work at the site to resume this summer. At its peak, 2,000 construction workers are expected to be on site simultaneously.

That timeline would allow for opening of a project whose predecessor, Meadowlands Xanadu, was first approved by the New Jersey Sports and Exposition Authority more than 14 years ago.

Last month, the Public Finance Authority — a Wisconsin-based, quasi-governmental agency that makes such issuances all over the country — put out a preliminary bond offering of $1.15 billion. That came on the heels of Triple Five’s announcement that it had closed on $1.6 billion in private financing.

That financing came only after investors had been assured that Triple Five had the necessary partners lined up to buy the bonds.

“I know Yogi Berra’s saying of ‘It ain’t over ’til it’s over,’ but this, to me, looks like it’s done — which is good,” East Rutherford Mayor James Cassella said.

Chip Barnett, a market reporter for Bondbuyer.com, said the American Dream bonds are “one of the biggest unrated deals I’ve seen in a long time.”

Bond underwriters sometimes do not seek a rating if the rating would lead to a description of them as “junk bonds.”

The bonds are non-recourse — meaning that bond purchasers have no opportunity to try to recoup their losses from the developer, the borough of East Rutherford, or the bond issuers or underwriters.

“For a sale of this magnitude, an underwriter typically would have spent a great deal of effort to get notifications of interest prior to the transaction, including having road shows and even having one-on-one meetings with particular investors,” Hallacy said.

What was happening back in 2003 when the Xanadu project was first approved? Wochit

Meadowlands Xanadu, American Dream’s predecessor, won a six-month bidding process in February 2003.

After mostly prevailing in a variety of legal battles, original developer Mills Corp. sold the project to Colony Capital in 2006.

The worldwide recession contributed to Colony’s exit in 2009, and a project lending group stepped in until Triple Five — operators of Mall of America in Minnesota and West Edmonton Mall in Alberta, Canada — took over in 2011.

The details of the project in the recent bond documents mirror what Triple Five has proclaimed for several years, including construction of a massive indoor water and amusement park complex; more than 1 million square feet of retail; four roller coasters; a large kosher food court; and an NHL-size skating rink.

 

The filing also confirms that American Dream will receive “a makeover, with existing colors being replaced with white, light-gray and off-white color changes on all existing exterior elevations.”

Some segments — such as the formerly  “hunter green” rounded space once promised to since-departed Cabela’s outdoors store – have been completely recast to a neutral look. Others — such as the 800-foot long snow park with multiple orange hues — have not been.

Lord & Taylor and Saks Fifth Avenue are confirmed as the two anchor retail tenants of what is to be more than 1 million square feet of retail in a 2.9 million square foot first phase of the project.

 

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