A recent loan maturity isn’t stopping a Los Angeles developer from forging ahead with plans to transform a former Carson’s store into a residential community within a west suburban shopping mall.
Pacific Retail Capital Partners aims to demolish the vacant department store this summer to make way for more than 600 apartments, as part of an overhaul of the 1.4 million-square-foot Yorktown Center mall in Lombard, CoStar reported.
The first phase of redevelopment calls for a park on the 12-acre former Carson’s site. The second phase calls for two apartment buildings totaling 621 units, called The Square, revolving around the park.
Pacific Retail Capital Partners is undeterred by the recent transfer of the mall’s loan to special servicing after it matured in March. The company views the move to special servicing, often a precursor to property relinquishment, as a strategic step to secure additional time to repay the loan, rather than a sign of faltering commitment.
“The loan transferring to the special servicer is something we have expected and does not impact the redevelopment of The Square, which we will be breaking ground on this summer, or our commitment to the property,” the mall’s general manager, Josh Dean, told the outlet.
Originally issued in 2014, the $150 million loan’s remaining balance stands at approximately $120.5 million. KBRA downgraded its rating in March, citing maturity and operational challenges facing regional malls.
Dean highlighted some positive features that have recently raised the mall’s value, including multifamily zoning approval and leasing momentum. Ongoing construction at the site includes spaces for Dave & Buster’s, Tapville, Ancho & Agave and Empire Burger + Brew.
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Yorktown Center’s imminent transformation aligns with a broader trend in the Chicago area. A handful of suburban shopping mall owners are working to redevelop their assets into vibrant mixed-use hubs, prompted by an increase of e-commerce during the pandemic, which wreaked havoc on Chicaoland’s office sector.
The Sterling Organization, for instance, is plotting a $440 million overhaul of the Golf Mill Shopping Center in Niles. In addition, French developer URW is in the middle of a $100 million renovation of the Westfield Old Orchard shopping mall in Skokie, with plans to add apartments, restaurants, wellness centers and commercial space.
—Quinn Donoghue