Lender shopping $66M note on South Barrington retail center

UnionBank hired JLL to market defaulted loan on Arboretum of South Barrington

Chicago /
Oct.October 06, 2021 01:02 PM

100 W Higgins Rd in South Barrington, IL (LoopNet, MapQuest)

A lender is on the hunt for someone to purchase the defaulted debt on a large shopping center in South Barrington, about 35 miles from downtown Chicago.

UnionBank hired Jones Lang LaSalle as the broker to market the $66.3 million loan taken out on the Arboretum of South Barrington, Crain’s Chicago Business reported.

The 480,000-square-foot shopping center is located at the intersection of Sutton and W Higgins roads. It is among many local shopping centers facing financial hardship as a result of the Covid-19 pandemic. UnionBank filed for foreclosure on the property in September 2020.

UnionBank is hoping to recover some of its investment in the Arboretum by selling the property’s debt. The ideal investor would be a specialist in redeveloping distressed retail properties. With the value of the property dropping, the cost of the debt is unknown, but would likely be less than $66.3 million.

Even if UnionBank is able to find an investor for the property, it will likely record a loss on investment for the shopping center. Additionally, a venture of Starwood Capital Group, which owns the Arboretum after paying $93 million — including the loan from UnionBank — for the property in 2015, will also record a loss.

Starwood is a large private-equity firm that also owns the Chicago Ridge Mall on Ridgeland Avenue. The firm has suffered large retail property losses and even relinquished ownership of more than 20 shopping malls to its lenders last year, according to Bloomberg.

With the growth of online shopping accelerating after the pandemic hit, shopping centers across the country have been struggling to stay afloat. Many retailers either went out of business or simply eliminated their physical brick-and-mortar stores, leaving empty storefronts everywhere.

Multiple Arboretum tenants, such as Xsport Fitness and Pearle Vision, have asked for assistance or a break on rent due to the decrease in customers. Another, Pinstripes bowling alley, restructured its lease this year and it included forgiveness for unpaid rent and modified the future rent payments. Other tenants, including Sur La Table and Gymboree, filed for bankruptcy protection, which would allow them to break their leases.

[Crain’s] — Victoria Pruitt






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