Lender Shopping $ 66 Million Note on South Barrington Shopping Center

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100 W Higgins Rd in South Barrington, Illinois (LoopNet, MapQuest)

A lender is looking for someone to buy overdue debt from a large shopping center in South Barrington, about 35 miles from downtown Chicago.

UnionBank hired Jones Lang LaSalle as a broker to market the $ 66.3 million loan taken out of the South Barrington Arboretum, Crain’s Chicago Business reported.

The 480,000 square foot shopping center is located at the intersection of Sutton and W Higgins roads. It is one of many local shopping centers facing financial difficulties due to the Covid-19 pandemic. UnionBank filed for foreclosure on the property in September 2020.

UnionBank hopes to recoup some of its investment in the Arboretum by selling the debt on the property. The ideal investor would be a specialist in the redevelopment of businesses in difficulty. With the property value falling, the cost of debt is unknown, but would likely be less than $ 66.3 million.

Even if UnionBank is able to find an investor for the property, it will likely experience an investment loss for the mall. In addition, a Starwood Capital Group company that owned the Arboretum after paying $ 93 million – including the UnionBank loan – for the property in 2015, will also record a loss.

Starwood is a large private equity firm that also owns the Chicago Ridge Mall on Ridgeland Avenue. The company suffered significant commercial property losses and even handed over ownership of more than 20 shopping centers to its lenders last year, according to Bloomberg.

With the growth in online shopping accelerating after the pandemic, malls across the country are struggling to stay afloat. Many retailers have gone bankrupt or simply shut down their physical stores, leaving empty storefronts everywhere.

Several Arboretum tenants, such as Xsport Fitness and Pearle Vision, have asked for help or a break on rent due to declining customer numbers. Another, the Pinstripes bowling alley, restructured its lease this year and it included remission of unpaid rents and changed future rent payments. Other tenants, including Sur La Table and Gymboree, have filed for bankruptcy, which would allow them to break their leases.

[Crain’s] – Victoria pruitt


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