Ashkenazy risks losing Mag Mile asset

Barings is moving against Ashkenazy Acquisition for its debt against a Magnificent Mile retail asset.

New York-based Ashkenazy acquired the 52,000-square-foot property at 625 North Michigan Avenue with a $61 million loan from Barings just before the pandemic hit, Crain’s reported, citing a person familiar with the matter. Now Ashkenazy, whose CEO is Ben Ashkenazy, has its head fully under water, as the famed retail strip has suffered from soaring vacancy rates and plummeting values since the health crisis.

Barings has snagged control of the property and is near hiring CBRE to sell it. The space in which Ashkenazy occupied now has an estimated value of just $40 million, meaning the firm’s equity stake could be wiped out completely.

The bulk of retail space at 625 North Michigan, which spans the lower floors of a 27-story building, is empty after big-named tenants Timberland and Coach jumped ship. The last remaining tenant is Garrett Popcorn, occupying a measly 1,500 square feet at the site. 

Other notable brands that have left the Mag Mile include Gap, Uniqlo and Banana Republic. Retail vacancy rates are hanging at 29 percent, which is double the pre-pandemic amount.

The loan had an initial maturity date of Jan. 1, 2023, according to Cook County records. But specific terms of the deal, like whether there was any flexibility to extend the maturity date, aren’t public, so it’s unclear as to how Ashkenazy defaulted on its loan.

Although the Mag Mile is still struggling mightily, there have been some signs of life, as some tenants are downsizing their space but at least staying on the boulevard. Apparel retailer H&M recently agreed to a four-year lease at 679 North Michigan Avenue, occupying 30,000 square feet of the four-story building, making it one of the largest deals on the strip in years. H&M previously held 60,000 square feet at 840 North Michigan Avenue.

Los Angeles-based Blatteis & Schnur also recently took a chance on the Mag Mile by purchasing a fully leased 5,860-square-foot space at 909 North Michigan Avenue for $27.3 million.

— Quinn Donoghue