Feil Misses $75M Loan Payoff for Suburban Chicago Mall

Jeffrey Feil’s suburban Chicago mall deal is back on life support, even after this month’s celebration of its updated look.

Feil Organization, the New York-based landlord of the 447,000-square-foot interior of the North Riverside Park Mall, failed to find new debt to pay off the property’s $75 million loan that already had its maturity date extended once after a stint in delinquency, loan servicer data provided by Morningstar Credit shows.

The mall spans 1.4 million square feet, with big-box stores, such as JC Penney, or their affiliates owning the outer retail parcels. Feil’s latest miss paying off its debt for its portion of the property follows a previous blunder by the landlord when it didn’t satisfy the loan’s original maturity date in 2019.

The commercial mortgage-backed securities loan then spent years in limbo. The debt was originated by Barclays in 2014 before it was sold off to CMBS investors. The loan servicer representing the bondholders in the debt, Wells Fargo, filed a foreclosure lawsuit against Feil in mid-2020, but the borrower prevented the property from being auctioned off in a short sale.

The property’s value has slid, along with much of the rest of Chicagoland’s indoor mall market — affiliates of investor Barry Sternlicht’s Starwood have lost a handful of big malls in the region to lenders due to debt defaults since the pandemic accelerated shifts away from brick-and-mortar retail. North Riverside Park Mall was appraised at $129 million in 2014 when Barings originated its loan, and then came in at just $33 million in 2020 during its last evaluation, loan data shows.

Feil negotiated to get a maturity date extension in North Riverside to October 2024, in part by agreeing last year to pump $8 million into renovating the mall with new flooring, ceilings and lighting. The renovation was completed in recent weeks, with an inflated budget of $9 million.

“It’s going the right way. If you’re not getting better, you’re getting worse, right? So, we’re getting better, continuing to grow,” Feil’s Brian Lade said at a ribbon-cutting ceremony held with North Riverside officials last week, the Chicago Tribune reported.

Feil, which has owned the mall since 2004, is hoping it can get another loan extension. Special servicer LNR Partners took over management of the loan. Special servicers are in charge of handling workouts of troubled securitized debts. LNR didn’t return a request for comment. Feil also didn’t return a request for comment.

“As the loan matured without an extension, it was sent to special servicing, however that is not an indication of the performance of the property,” a spokesperson for Feil said. “Feil is committed to the North Riverside Park Mall and is confident that we will successfully conclude a loan extension.”

LNR didn’t return a request for comment.

North Riverside Park Mall isn’t Feil’s only property in the Chicago area that needs breathing room to pay off troubled debt. The landlord also had a separate $105 million loan tied to 10 South LaSalle Street in Chicago transferred to special servicing for imminent monetary default in 2022, where it remains today. That property’s special servicer, Rialto Capital, is discussing how to work out the debt with Feil and considering various options.

Furthermore, Feil surrendered a River North office building at 730 North Franklin Street earlier this year to Beltway Capital, which bought the building’s $15.3 million loan note, likely at a substantial discount from its face value.