Since its groundbreaking nearly two decades ago, the megamall built in New Jersey’s Meadowlands has done little except hemorrhage cash. Now, less than two years after its much-delayed opening, the complex known as American Dream is threatening to dash the lofty ambitions of yet another developer, Bloomberg News reported. The Ghermezian family, which runs some of the biggest and most successful malls in North America, can’t keep up with the bills on the shopping and entertainment megaplex, which helped drive its original developer to the brink of bankruptcy and later was seized by lenders from the team that came next. Revenue from the stores has been so scarce amid the surging pandemic that the Ghermezians have hired legal and financial advisers to help them ease the crushing $3 billion debt load, and perhaps retain some role in running the project. The family members aren’t the only ones who stand to lose big money. Lenders including JPMorgan Chase & Co., Goldman Sachs Group Inc., Soros Fund Management and Starwood Property Trust Inc. could face losses on $1.7 billion in construction loans. About $1.1 billion of municipal debt is also backing the project.
Macy’s Inc. projected sales and earnings for the current year that outpaced Wall Street’s estimates — a sign that its efforts to boost online sales are paying off. Following the release, Fitch Ratings boosted the department-store retailer to investment grade, Bloomberg News reported. The company sees full-year earnings of $4.13 to $4.52 a share, excluding some items, topping the $3.98 average estimate of analysts surveyed by Bloomberg. Macy’s projects net sales to be $24.46 billion to $24.7 billion, compared with the analyst estimate of $24.2 billion. Fitch raised Macy’s debt to BBB-, citing strong sales and “some evidence of successful implementation” of its business overhaul. The company remains below investment grade at S&P Global Ratings and Moody’s Investors Service. Same-store sales, a key metric in retail, rose 28% on an owned basis in the quarter ended Jan. 29, according to a statement Tuesday. That’s above the average estimate of about 26% from analysts. Chief Executive Officer Jeff Gennette said that Macy’s has overcome COVID-19 disruptions, logistics problems, labor issues and inflation pressures.
Health care providers are increasingly choosing former stores for their offices and clinics, in a trend known as medtail — a reflection of the medical industry’s migration to retail properties, the New York Times reported. The pandemic has accelerated their embrace of retail space. Taking advantage of depressed rents, medical providers are opening facilities in storefronts on city streets and moving into malls and shopping centers in suburban and rural areas, sometimes occupying the hulking shells vacated by big-box and department stores. In the past, landlords might not have welcomed such tenants — some just didn’t want sick people around their properties, experts say — but they are increasingly seeking them out to fill vacancies and help generate foot traffic that may benefit the other occupants. This has been especially true for health care providers that brand themselves as so-called wellness companies, adopting the look and feel of consumer-oriented retailers.
Fueled by pay gains, solid hiring and enhanced savings, Americans sharply ramped up their spending at retail stores last month in a sign that many consumers remain unfazed by rising inflation, the Associated Press reported. Retail sales jumped 3.8% from December to January, the Commerce Department said Wednesday, a much bigger increase than economists had expected. Though inflation helped boost that figure, most of January’s gain reflected more purchases, not higher prices. Last month’s increase was the largest since last March, when most households received a final federal stimulus check of $1,400. The fact that consumer spending remains brisk even after government stimulus has faded — enhanced unemployment aid ended in September — suggests that Americans’ pay is rising enough to drive a healthy pace of spending and economic growth. Still, those trends could also further accelerate high inflation, which has become the biggest threat to the economy and the reason the Federal Reserve is expected to raise interest rates several times this year beginning in March. Retail sales rose solidly across the spectrum in January. Sales at general merchandise stores rose 3.6% and at department stores 9.2%. Purchases at furniture and home furnishings stores increased 7.2%. Online sales jumped 14.5%.
The owner of the American Dream super-mall in New Jersey is seeking a four-year extension to repay $1.7 billion in construction financing after project holdups and pandemic lockdowns kept shoppers away, Bloomberg News reported. Triple Five Group, American Dream’s owner, is asking a group of lenders led by JPMorgan Chase & Co. for more time to repay loans made in 2017. The 2017 debt included a $1.2 billion senior loan and a $475 million mezzanine loan that was supposed to be repaid last year. The talks are part of a larger effort to restructure the mall’s $3 billion in debt and avoid bankruptcy for the massive shopping and entertainment complex in New Jersey’s Meadowlands, the people said. The mall also has $1.1 billion in municipal bonds that are senior in repayment rank to the construction financing. Triple Five said last week that the mall nearly depleted a reserve account to make a $9.3 million interest payment on a municipal bond supported by sales tax receipts.
John Foley, the chief executive and a founder of Peloton, could barely contain his excitement. It was May 2020, just a couple of months into the pandemic’s shelter-in-place orders. With gyms locked down, people had started panic-buying Peloton’s $2,245 internet-connected exercise bikes for their homes. Revenue from the systems soared 66 percent from a year earlier, and more than one million people had signed up for the company’s online exercise classes. A backlog of orders piled up. It was a moment of triumph — and one that led to Peloton’s downfall, the New York Times reported. To meet that surging demand, the New York company aggressively ramped up production. When orders waned as gyms and fitness studios reopened, it suddenly had a glut of machines. In recent months, Peloton temporarily halted production of its bikes and treadmills. Its losses deepened. Those issues — compounded by a recall of its treadmills, the appearance of an activist investor and a spate of negative television portrayals — culminated yesterday when Foley announced that he would step down as chief executive and become executive chairman. Peloton said that it was restructuring itself, laying off 2,800 workers, or 20 percent of its work force. Barry McCarthy, a former chief financial officer of Spotify, was named chief executive and president.
Ocean carriers have been imposing more and larger such fees for boxes that have been sitting for longer periods, sometimes weeks at a time, in logjams that have snarled supply chains during the COVID-19 pandemic, the Wall Street Journal reported. U.S. lawmakers and regulators are taking a hard look at the charges and other shipping practices that critics say have sharply raised costs for American importers and hamstrung the ability of exporters to reach overseas markets. New measures in Congress and actions by the U.S. maritime regulator, the Federal Maritime Commission, target a container shipping sector dominated by foreign-based carriers that made profits last year estimated by London-based Drewry Shipping Consultants Ltd. at about $150 billion. Sens. Amy Klobuchar, a Democrat, and John Thune, a Republican, introduced legislation Thursday to change the 24-year-old Ocean Shipping Reform Act. The measure would draw new restrictions around how carriers may coordinate operations in alliances and would prohibit shipping lines from “unreasonably” declining exports. It would also limit the ability of carriers to impose added fees on container handling.
American Dream, the $5 billion super mall in New Jersey’s Meadowlands, drained a reserve fund to make a bond payment as it struggles to attract shoppers and tenants with the pandemic set to begin its third year, Bloomberg News reported. The 3.5-million-square-foot shopping and entertainment complex, which features an indoor ski slope, amusement park and water park, nearly emptied a reserve account to make a $9.3 million payment due Tuesday on about $290 million of debt supported by sales tax receipts, according to a securities filing. About $820 is left in the reserve fund, the filing said. It’s not clear whether American Dream will make its next payment on the securities, due Aug. 1. Failure to make a payment on the sales tax debt doesn’t constitute a default nor require the borrower to pay back the loan immediately, according to bond documents. However, the filing disclosing the reserve draw included a letter from bond servicer Trimont Real Estate Advisors saying American Dream wasn’t complying with obligations under the bond documents to provide updates on project costs and performance. Remedies for the breach “range from specific performance to a special redemption of all the bonds,” the letter said.
Hanging over the $800 billion Paycheck Protection Program, one of the government’s most expensive pandemic relief efforts, is a simple question: whether or not it worked. New research, drawing on millions of wage and payroll records, suggests a complicated answer: Yes, but at an extraordinarily high cost, according to the New York Times reported. One new analysis found that only about a quarter of the money spent by the program paid wages that would have otherwise been lost, partly because the government steadily loosened the rules for how businesses could use the money as the pandemic dragged on. And because many businesses remained healthy enough to survive without the program, another analysis found, the looser rules meant the Paycheck Protection Program ended up subsidizing business owners more than their workers. “Jobs and businesses are two separate things,” said David Autor, an economics professor at the Massachusetts Institute of Technology who led a 10-member team that studied the program. “We tried to figure out, ‘Where did the money go?’ — and it turns out it didn’t primarily go to workers who would have lost jobs. It went to business owners and their shareholders and their creditors.” Questions about the success of the program have gained urgency as the Omicron variant of the coronavirus disrupts the country’s economic upswing, intensifying calls from hard-hit industries like restaurants for a new round of federal aid. Congress rushed to create the Paycheck Protection Program in the pandemic’s early days, trying to prevent struggling small companies from gutting their work forces and adding to the staggering unemployment rate. The program offered business owners low-interest loans of up to $10 million to cover roughly two months of payroll and a few additional expenses. The loans would be forgiven as long as the money went to permitted costs. Nearly every company in America with 500 or fewer workers (and some larger ones) qualified: law firms, construction companies and restaurant chains as well as Uber drivers, freelancers and the bars, boutiques, grocery stores and hair salons that are the backbone of many Main Streets. Early studies of the program — which generally focused on the largest small companies — were not flattering, finding it had little effect on preserving jobs. But Michael Dalton, a research economist for the Bureau of Labor Statistics who drew on extensive wage records collected by the government that other researchers did not have access to, said it had performed better than he expected. Within one month of being approved, companies that got loans had an average head count 8 percent higher than comparable businesses that didn’t. After seven months, their work forces were still 4 percent larger, maintaining a lead even as hiring nationwide began to bounce back.
