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Mall of America owner puts megamall on the line for massive New Jersey project

Eric Roper, Star Tribune (Minneapolis) on

Published in Business News

The owner of the Mall of America has put up Minnesota's signature retail destination as collateral in a high-stakes gamble on a new mega-attraction in the shadow of New York City.

Triple Five Group pledged a 49% stake in the megamall as collateral to win a construction loan for its massive American Dream entertainment and retail complex in the New Jersey Meadowlands, a project slated to open in October after several failed attempts by past developers.

Bloomington, Minn., officials were surprised to discover the 2017 guarantee in bond documents last fall, just as the city was developing plans to finance a water park beside the mall, proposed by Triple Five.

Bloomington staff are intensely interested in Canada-based Triple Five's business dealings, in part because the mall makes up about 10% of the city's tax base. The Mall of America has pressed for and won millions in tax subsidies from the state Legislature in recent years to aid in the mall's expansion, which is making the water park deal possible.

"We would prefer that Mall of America wasn't used as collateral for other projects," said Schane Rudlang, administrator of Bloomington's port authority. The discovery spurred a conference call between city and Triple Five officials to better understand the deal, Rudlang said, and ultimately the city changed its contract with Triple Five to compel disclosure about similar pledges in the future. It highlighted the issue in a staff report in July.

The 3 million-square-foot American Dream project's entertainment offerings will be big even by Mall of America standards, featuring a DreamWorks water park, Nickelodeon amusement park, 16-story ski slope, ice skating rink and an observation wheel facing the New York skyline. With 5.6 million square feet, the Mall of America will remain the largest shopping center in the country, Triple Five representatives said, but a larger share of American Dream is dedicated to entertainment space.

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Baltimore-based retail consultant Nick Egelanian said Triple Five's owners are banking on high-profile attractions to stimulate retail sales, and there's no agreement among the industry experts he consults with about whether it will work.

"They are making a huge bet on American Dream and obviously putting part of the Mall of America at risk in it," Egelanian said.

Triple Five's wager comes as malls across the country find themselves imperiled by retail bankruptcies and closures brought on in part by online shopping. "Bricks and mortar shopping malls are in disarray," Triple Five executive Kurt Hagen told Bloomington officials this year, explaining why the Mall of America -- which he said is not in trouble -- must continue to evolve.

"Mall of America is a proof of concept that destination retail works," mall spokesman Dan Jasper said in a statement. "Triple Five has been proving the success of this development model for more than 35 years, first with West Edmonton Mall and then with Mall of America. We are confident in the vision and in the future because we are experiencing the success every day."

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