Loan trustees have moved to foreclose on two South Side Chicago shopping centers, adding to the list of area retail properties struggling to repay loans during a pandemic that came on top of the loss of business to e-commerce.
The Yards, a 261,000-square-foot property in the Back of the Yards neighborhood, is facing a suit filed in December, while it has more than $25 million in debt, Crain’s reported, citing public records. In the Chatham neighborhood, the 124,000-square-foot Chatham Village Square retail site is also facing a court action, with a $22.9 million mortgage, the outlet reported.
Troubling financial situations for retail centers have been exacerbated by COVID-19, with chain stores expanding less frequently, leaving vacancies where business tenants wiped out by the pandemic’s consequences haven’t yet been replaced. That’s all against the backdrop of e-commerce making strides amid the health crisis after already presenting tough competition for brick and mortar retail for years.
“It’s a winnowing of the market to eliminate some of those stores or centers that don’t work anymore,” James Matanky, CEO of Matanky Real Estate Group, owner of retail properties on the South Side, told Crain’s. He unsuccessfully tried to buy The Yards in 2014, telling Crain’s he thought the venture led by a Brazilian business executive, Michael Klein, overpaid for the property at the time at $39.8 million, the outlet reported, citing property records.
Klein is CEO of Brazilian department store chain Casas Bahia. His venture financed the purchase of the property and another shopping center in Houston bought at the same time with a $51.4 million loan, Crain’s reported. It was packaged into a commercial mortgage-backed securities offering, the outlet reported.
Musa Tadros, a local investor, owns Chatham Village, Crain’s reported. Tadros is owner of Crown Commercial Real Estate, based in Will County, and bought Chatham in 2012 with a $27.5 million loan, Crain’s reported, citing county records. The loan was packaged into a CMBS offering, and appraised value has dropped to $13.4 million recently from $38.7 million in 2012, the outlet reported.
[Crain’s] – Sam Lounsberry
Read more
Commercial
Chicago
Lender shopping $66M note on South Barrington retail center
Commercial
Chicago
Facing foreclosure, GW Properties hands over Orland Park shopping center