VIP cocktail parties, DJs, dancers, fashion shows, balloons and much more — opening day at the Canadian-owned U.S. megamall called American Dream had been planned for maximum effect and excitement.
The project in New Jersey, just across the bridge from Manhattan, was nine years in the making, and patterned on the West Edmonton Mall and the Mall of America in Minneapolis, the other two well-known destinations owned by the wealthy Ghermezian family of Edmonton.
All three properties combine retail shops with amusement park attractions. The American Dream’s approximately three million square feet includes attractions like a DreamWorks water park, Angry Birds mini golf, Legoland and an indoor ski slope plus some 450 retailers such as Levi’s, Sephora, H&M and Zara.
But, of course, the March 19 grand opening didn’t happen. A global pandemic happened instead. The venue was shut down March 16 along with all casinos, gyms, and movie theaters in the state.
Now an October 1 reopening is planned, but it comes amid financial turmoil.
Mortgage not paid since March
All three of the Ghermezians’ entertainment/shopping venues have been linked together in a financial arrangement that shows signs of weakness.
In order to help finance American Dream, the family’s company, Triple Five Group, mortgaged both West Edmonton Mall and Mall of America. According to Trepp LLP, a data company that tracks commercial mortgages, Triple Five has missed payments on the $1.4 billion US Mall of America loan since March. The status of finances at West Edmonton Mall aren’t clear.
“The Ghermezians have a very complex business empire, and shopping centres are part of it, but it’s a privately owned company so we don’t have all the information,” says Nick Egelanian, a retail consultant in Annapolis, Maryland, who’s been watching Triple Five’s gamble closely. “But it looks like this situation could put all the properties into default.”
Both Goldman Sachs and JPMorgan Chase, the New York City-based investment firms that helped arrange construction loans for the Ghermezians, declined a CBC News request for comment.
Lineups for ski hill
Members of the Ghermezian family aren’t talking either. They are “extremely busy” with the new October 1 grand opening plan for American Dream, according to a spokesperson. The venue’s chief creative officer, Ken Downing, is handling media interviews, and he insists all is well in hand.
“The team is super-excited,” he said in an interview from Manhattan. “We’ve been wanting to reintroduce and reopen to the public, and we want to do it the right way.”
WATCH | Dianne Buckner tours American Dream megamall under construction in 2018:
Dianne Buckner reports on the latest massive project from the Ghermezian family 5:39
The launch of American Dream was planned to happen in stages, and a few of the attractions did indeed open in the fall of 2019. Retailers and the remainder of the theme park’s attractions had originally been intended to open with a bang in March. For now, admittance to the entire megamall is restricted to a quarter of its capacity due to COVID.
“I don’t think you’d be able to find many large projects like ours that haven’t been touched by COVID,” said Downing.
He points to the sole attraction that reopened on September 1 this year, the indoor ski hill, and says people have been waiting in line as early as 8:00 a.m. with their skis and snowboards. “People love that ski slope,” said Downing. “It’s been as busy as it can be with 25 per cent capacity.”
Snowboarders and skiers pictured at the grand opening of Big Snow last December. The attraction shut down in March due to the pandemic, and reopened on Sept. 1. (Seth Wenig/The Associated Press)
But even before the economic catastrophe of the pandemic, there was plenty of skepticism about the wisdom of opening the new mall amid a climate marked by multiple major retailers seeking bankruptcy protection or liquidating assets. Besides, there are already more than enough malls in the state, according to Jeff Tittel of the New Jersey chapter of environmental group Sierra Club. He says there’s no way American Dream will solve the financial predicament for all three of the Ghermezians’ properties.
Wrong place, wrong time
“People going to New York City want to go to the Radio City Music Hall or the Empire State Building,” he said. “They’re not going to get on a bus and come to New Jersey.”
The Sierra Club has opposed American Dream from day one due to its impact on wetlands in the area. “It’s always been the wrong project in the wrong place at the wrong time,” said Tittel.
But the Ghermezian family — whose patriarch arrived in Canada from Iran in the 1950s and built Triple Five along with a fortune in real estate development, with the help of his four sons and now grandsons — is not easily discouraged.
Don Ghermezian of Edmonton’s Triple Five Group, on site in 2018 at the construction of the American Dream megamall in New Jersey. The West Edmonton Mall, also owned by his family, has been used as collateral to help fund construction in a financial arrangement that now looks shaky due to COVID-19. (Jon Castell/CBC News)
In the late 1990s, they spent four years battling a lawsuit brought by the Alberta Treasury Board and emerged triumphant. And before West Edmonton Mall and Mall of America were built, there was doubt either of those venues would ever work. Both have been remarkably successful, ranked as top tourist attractions.
The future of malls
Steve Rappaport, a New Jersey commercial real estate broker who specializes in retail leasing, says talk of malls being doomed is off-base.
“People love to congregate,” said Rappaport. “It’s always been about much more than shopping at a mall. They are places where people go to mall-walk in the morning, and teenagers go there after school just to hang out.”
The view of Manhattan from Triple Five Group’s offices in New Jersey, located next to American Dream. ( Jon Castell/CBC News)
He believes profitability at American Dream will be a struggle, but he says he has no doubt the Ghermezians will stay the course. “I don’t think that all of the sudden they’re going to say all is lost and just hand the keys back.”
There is, however, that matter of the mortgages. Late payments on an almost $1.4 billion loan are no small thing.
The managing director of Trepp LLP, Manus Clancy, says everything hinges on the lenders.
“They have to assess does the borrower want the property, and do they have the financial ability to keep this thing going? Or are we better to take the property over and find a new team to run it?”
Some in the industry believe that only the Ghermezians have the experience to run unique destinations such as American Dream, West Edmonton Mall and Mall of America, with their distinctive mix of retail and theme park attractions.
Clancy isn’t convinced.
“We do have big players in the U.S., like Simon and Brookfield; they are operators of high-end malls in the U.S. So there are people that would be candidates,” he said, if the lenders lose confidence in Triple Five Group.
In Edmonton, the executive director of the Building Owners and Management Association, Percy Woods, has faith in the family.
“They might have their PhD in dealing with financial situations,” he said. “They always come out OK. They’re very smart. And they’ve been very successful.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
