Landlord Hands Back Keys to Mall on Chicago’s Magnificent Mile

A high-profile Magnificent Mile retail asset is now in the hands of its lender.

Alaska Permanent Fund recently surrendered the Shops at North Bridge, a vertical mall at 520 North Michigan Avenue, to Pacific Life Insurance through deed in lieu of foreclosure, CoStar reported. At 678,000 square feet, it is one of the largest retail properties on the Mag Mile.

The giveback comes amid growing financial strain on the iconic retail destination. The property was last refinanced in 2016 with a $375 million loan, but the deed-in-lieu suggests its current value falls significantly short of that figure.

The lender has not disclosed the outstanding loan balance, but the voluntary transfer highlights the property’s difficulties in maintaining profitability.

A partnership between the Alaska Permanent Fund and Macerich acquired the property for $515 million ($760 per square foot) in 2008, just before the real estate crash spurred by the Great Recession. The partners also bought nearby vacant land for $42 million in 2014 but never developed it. Macerich sold its 50 percent stake in 2020 for only $21 million, leaving the Alaska Permanent Fund as the sole owner.

This surrender is not an isolated incident. Brookfield Property Partners handed Water Tower Place, another Magnificent Mile landmark, back to its lender in 2022. More recently, New York investor Ben Ashkenazy went through a similar scenario with its lender, Barings, after a $61 million default at 625 North Michigan Avenue.

Despite the declining foot traffic and shifting consumer preferences, signs of revival have emerged. A Harry Potter-themed retail experience and a Mango location promise to reinvigorate foot traffic.

However, such developments are unlikely to provide immediate relief to struggling property owners. Pacific Life Insurance has yet to outline its plans for the site.

The Alaska Permanent Fund, which manages Alaska’s oil and gas revenues, holds a portfolio valued at $80.5 billion, including $9.3 billion in real estate. While the decision to relinquish the Shops at North Bridge is a significant financial loss, it allows the fund to redirect resources toward more profitable investments.

— Andrew Terrell