Namdar venture gets distressed Joliet mall for $31M

Great Neck, New York-based investor pounces on 1M sf regional retail asset that Starwood lost in foreclosure of $85M loan

Namdar Realty Group’s Igal Namdar with Louis Joliet Mall at 3340 Loop Mall Drive (Namdar Realty Group, Google Maps, Getty)

Sam Lounsberry

Jul 5, 2023, 6:39 PM

Namdar Realty Group’s next regional mall turnaround attempt will come in Joliet.

The New York-based distressed retail assets specialist bought the troubled Louis Joliet Mall in Chicago’s southwest suburbs for $31.4 million from a lender that took back the property from a venture of Barry Sternlicht’s Starwood Capital, according to Will County records.

The previous owner surrendered the massive asset after missing payments on an $85 million loan in 2020. That puts Namdar’s basis at about one-third of Starwood’s, which saw an appraised value of $131.8 million in 2012, when it took out its ultimately doomed loan.

The mall’s performance failed to carry the large debt load over the years as retail markets shifted. Built in 1978, the 940,000-square-foot property at 3340 Mall Loop Drive has just two department store tenants today, Macy’s and JCPenny. That’s down from four in 2018, when Carson’s went out of business, which was followed by Sears closing its store there in 2019.

The portion of the property recently sold by a trust overseeing the debt that Starwood failed to pay off includes only the 343,000 square feet on the interior of the mall and not the separately owned department store parcels. The 17-acre Sears parcel, which includes a 190,000 square foot department store building and a 24,000-square-foot auto center, was sold for $4.3 million by Seritage Growth Properties early this year to car dealer Ghaben Auto Group.

Still, the property remains central to Joliet’s retail, dining and overall economic picture.

The buyer is an LLC that shares an address with Namdar, which didn’t respond to a request for comment.

The firm’s plan to derive more value from the property is so far unclear, though landlords of other regional malls have already provided a hint at Namdar’s prospective route. Putting up apartment towers on top of or nearby large suburban retail assets is the path to repositioning malls that other Chicagoland owners are taking. In Skokie, for instance, French developer Unibail-Rodamco-Westfield is putting more than $100 million into adding at least 350 housing units to the Old Orchard Mall, where a former Bloomingdale’s store is located.

Namdar’s website claims it closed on the property on June 16, when there was an auction held by JLL, after the previous loan’s special servicer, Rialto Capital, tapped the brokerage to sell the asset out of distress.

The lender forced to take the Joliet mall over from Starwood was the UBS-Barclays Commercial Mortgage Trust, which consisted of a package of debts that had been originated by Barclays and UBS that were securitized and sold off to investors in the financial products.

Namdar has several other retail assets in the Chicago area, including one in DuPage County, where a suburban government is suing the firm to try and wrest control of a property. The village of Bloomingdale has spent more than $5.6 million to buy former department stores and land near the Stratford Square Mall, and this year filed a condemnation lawsuit against Namdar, which owns the mall’s interior and a JCPenny box on the site.

Chicago