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JPMorgan, Goldman on verge of owning portion of Mall of America

Kavita Kumar, Star Tribune on

Published in Home and Consumer News

Two of the nation's largest banks are about to become stakeholders in the Mall of America as its principal owner, Triple Five, is close to a deal to restructure its debt after defaulting on a loan for another megamall project.

JPMorgan Chase, Goldman Sachs, and other real estate investors will wind up with nearly half of the ownership in the Bloomington mall, according to a report in the Financial Times that cited anonymous sources who said the deal could close as soon as this week.

That group of lenders backed Triple Five's $1.67 billion construction loan on its massive American dream project in New Jersey. That project has been beleaguered by years of delays and was slated to finally open its retail portion in March 2020. But then the pandemic hit, delaying its opening for more than six months.

A few years ago, Bloomington city officials raised concerns when they discovered that Triple Five had offered the Mall of America and its West Edmonton Mall as collateral in order to secure the construction loan in 2017 for American dream.

Triple Five executives told the Bloomington City Council and the Bloomington Port Authority earlier this month that the significant cash flow problems created by the pandemic would likely mean that the lenders will secure a minority stake in Mall of America and the West Edmonton Mall.

The deal was structured so Triple Five will retain 51%, while the lenders will get a 49% interest in it.

 

Kurt Hagen, a Triple Five executive, said at that meeting that if that happens, there will be no impact on Mall of America or its operations. He said it would mostly meant that just under half of the profits from Mall of America would go to the minority stakeholders.

"Lenders would have a non-controlling interest," he said. "And quite frankly, they have no interest in running a shopping mall. They're very confident in Triple Five's ability to do so."

He added that it would have been better for Triple Five financially if a hurricane hit the mall, or if it had been burned down in a fire because then it would have been covered by insurance.

"This pandemic we didn't see coming has not been covered is and the worst scenario imaginable," he said.

The report in the Financial Times noted that it was unclear if the lenders would likely continue as minority stakeholders long-term or if they might try to sell their positions.

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