Cayre and Ashkenazy Work Out $98M Aareal Debt on Mag Mile

Bobby Cayre and Ben Ashkenazy are locked in on the Magnificent Mile after paying down a big chunk of debt to their lender.

A joint venture of the New York-based real estate titans is keeping one of Chicago’s most recognizable retail spots at 700 North Michigan Avenue, known as the Chicago Place Mall. To do so, the venture had to cough up $65 million to lender Aareal Capital Corporation, property records show.

As part of the loan paydown, Aareal extended a new $33 million senior mortgage loan against the 300,000-square-foot property, which currently houses Saks Fifth Avenue and Zara in its two ground-floor corner spaces. There is a vacancy in the spot between those stores, and T-Mobile vacated 11,000 square feet in 2023. Ashkenazy has previously toyed with the idea of turning the upper floors of vacant former shopping space into offices.

Aareal in 2021 extended the loan term for the borrowers after they paid down $6.7 million of principal on a $105 million loan originally issued in 2016. After Aareal agreed to allow the borrowers more time to pay off the $33 million in new debt, an entity linked to Cayre’s firm Aurora Capital Associates at 1407 Broadway in New York provided a $65 million junior loan to the property with a maturity date of 2040.

How the landlords sourced the junior loan is unclear.

But together, the sum could amount to payoff for most of the Aareal debt, signalling Cayre’s and Ashkenazy’s confidence in the Magnificent Mile, despite its struggles in recent years.

Aareal and Cayre’s firm declined to comment, while Ashkenazy Acquisition didn’t return requests for comment. It’s unclear whether the owners altered the portion of the property each of them owns as part of the transaction.

However, the new financing staves off near-term distress at a time when Mag Mile landlords are struggling with vacancies, falling rents and shaky lender confidence.

Other major properties, including Water Tower Place, have faced foreclosure threats or forced sales after tenants walked. By locking in new debt, the pair avoid the fate of some peers who’ve handed back keys.

Cayre has been involved with the property since 2004, when it was purchased for $39 million, and Ashkenazy and New York investor Alex Adjmi were also investors. It’s unclear from property records whether Adjmi is still a part of the ownership.

Still, the fundamentals remain murky. Leasing momentum is slow, and while the city has floated ideas to revive the avenue — from entertainment-driven tenants to more residential conversions — the road back to pre-pandemic vitality may be long, and even if Cayre and Ashkenazy’s fresh capital buys time, there’s a question of whether it will be enough.