Rudlang said it is not clear what the practical effect would be if another entity assumed minority ownership of the mall. Hagen said in a statement to the Star Tribune that there would be no effect, since Triple Five would retain a controlling interest. Triple Five was a part-owner until 2006, when it took full control.
"There's one school of thought that says there would be no impact, because Triple Five would still own 51%," Rudlang said. "And there's another school of thought where there's a very interested minority owner."
Years in the making
The American Dream project has been dogged by financial troubles and lawsuits since previous developers broke ground on what was then called "Xanadu" in 2004. Construction stopped during the U.S. financial collapse, prompting then-Gov. Chris Christie to call the unfinished and colorfully clad complex the "ugliest damn building in New Jersey and maybe America." When Triple Five took over in 2011, there were still hopes it could be completed in time for the Super Bowl at the nearby Meadowlands in 2014.
But lawsuits and financing hiccups caused further delays. State and local tax subsidies ultimately backed $1.1 billion in tax-free municipal bonds for the project. That was coupled with a $1.67 billion construction loan secured by a 49% interest in the Mall of America and the West Edmonton Mall. JPMorgan Chase was the primary lender for the construction loan, Hagen said, but there are additional lenders.
"Financing approaches like this are quite common in large development projects such as American Dream," Hagen said in a statement. "Construction loans typically require guarantees from a parent company, and since Triple Five is not a public company, this was the most direct way for Triple Five to provide that guarantee. It is strictly a contingent liability and no impact is anticipated on Mall of America."
The American Dream financing was the largest sale of unrated municipal bonds in 2017, according to Bloomberg. Bonds are generally unrated if they are deemed too risky to earn an investment-grade rating, said Maryland-based investment banker Nate Betnun, who specializes in tax-exempt bond deals. Betnun said the bonds far exceed what would be normal for a mall project, which usually ranges from $5 million to $100 million.
"It clearly was a risky venture," Betnun said, adding that the latest leasing estimates show that the project is off to a good start.
"That project has a good chance of succeeding, just based on the tenants they've attracted and the size of the market," said Minneapolis retail consultant Jim McComb. "And when you consider the size of that market and the size of the Minneapolis market or the Edmonton market, they've got a lot better chance of success there than they had with Mall of America."
Triple Five is also in the planning stages of an even larger destination mall outside Miami called American Dream Miami. Asked if the Mall of America would be used as collateral for that project, Hagen said he cannot speculate on future financing arrangements.
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