The American Dream entertainment and retail complex in New Jersey’s Meadowlands has suffered a sharp hit to its assessed value—down by $800 million—fueling new concerns for municipal investors tied to the troubled mega-project.
A revised property tax assessment from the Borough of East Rutherford now values the 3.5 million-square-foot site at $2.5 billion, according to updated financial filings posted Tuesday on the MSRB’s EMMA platform. That marks a steep drop from the previous valuation of $3.3 billion.
The mall—home to an indoor amusement park, water park, and year-round ski slope—was built with the help of $1.1 billion in tax-exempt municipal bonds. Roughly $800 million of that debt is secured through PILOTs (Payments in Lieu of Taxes), which are calculated at 90% of what a normal property tax bill would be.
Last year, American Dream paid about $48.4 million toward its bond obligations, falling short of the $54.1 million needed to fully cover annual debt service. The bond trustee has had to tap into cash reserves to meet payments in full.
With the revised $2.5 billion valuation, the PILOT obligation drops further to an estimated $36.5 million annually, deepening the revenue shortfall. As of December 1, 2024, the bond reserve fund held about $38 million—barely enough to cover a $27 million interest payment due on June 1.
Despite the cut in valuation, bonds tied to the American Dream development haven’t yet seen major volatility. Securities maturing in 2050 with a 7% coupon were trading around 100.8 cents on the dollar on Wednesday, only slightly below their April value. Asset manager Nuveen reportedly holds close to $700 million of this debt, but declined to comment.
Originally conceived nearly 20 years ago and finally opened in October 2019, American Dream faced immediate setbacks as COVID-19 lockdowns hit just five months later, delaying retail openings until late 2020.
Though sales at the property are trending upward—with reported gross sales of nearly $650 million in 2024, an 18% year-over-year increase—they remain well below the $2 billion first-year projection from a 2017 feasibility study.
Adding another layer of uncertainty, American Dream is appealing tax assessments for the years 2019 through 2025, citing pandemic-related damage to the property’s market value. If successful, those appeals could further reduce PILOT revenue, increasing the risk to bondholders.
Investors should note: under the bond’s structure, missing an interest or principal payment does not automatically trigger a default. Instead, the maturity of the debt—scheduled in balloon payments across 2027, 2037, 2042, and 2050—can be extended until final resolution or until December 1, 2056. After that date, any unpaid principal is no longer recoverable.
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.