Joliet, a city in Chicago’s southwest suburbs, is set to be the next target for Namdar Realty Group, a distressed retail assets specialist based in Great Neck.
The company recently acquired the struggling Louis Joliet Mall for $31.4 million from a lender that repossessed the property from a venture led by Barry Sternlicht’s Starwood Capital, a private alternative investment firm focused on global real estate.
The previous owner relinquished control of the massive property after defaulting on an $85 million loan in 2020.
Namdar’s purchase price represents approximately one-third of Starwood’s investment, as the property was appraised at $131.8 million in 2012 when Starwood initially secured the now ill-fated loan.
Over the years, the mall’s financial performance suffered due to shifts in the retail market. Constructed in 1978, the 940,000-square-foot property currently houses only two department store tenants, Macy’s and JCPenney.
Business Insider analyzed the decline of malls in an article titled “The decline of the American mall has left just 700 still standing. Soon there may be just 150 left,” in October 2022.
In it they write, “Ten years from now, there will be approximately 150 malls left in the U.S.,” Nick Egelanian, president of retail consulting firm SiteWorks, told The Wall Street Journal. That’s down from around 2,500 locations in the 1980s and 700 today, Egelanian said.”
Malls have been in competition with online shopping for decades, but the recent Covid-19 pandemic could be the nearly fatal death blow to the American icon.
The section of the property recently sold by the trust overseeing Starwood’s unpaid debt includes only the interior portion of the mall, encompassing 343,000 square feet, and not the separate department store parcels.
The 17-acre Sears parcel, featuring a 190,000-square-foot department store building and a 24,000-square-foot auto center, was sold for $4.3 million earlier this year to car dealer Ghaben Auto Group by Seritage Growth Properties.
Namdar’s plans for maximizing the property’s value remain unknown to the public. Public information on Namdar’s website gives the details of the transaction.
Mainly that the company completed the purchase of the mall on June 16 through an auction conducted by JLL Capital Markets, after Rialto Capital, the special servicer for the previous loan, engaged the brokerage to sell the distressed asset.
The lender that took control of the Joliet mall from Starwood was the UBS-Barclays Commercial Mortgage Trust, a package of debts originating from Barclays and UBS, which were securitized and sold to financial investors.
Namdar already owns several other retail assets in the Chicago area, including one in DuPage County, located just 20 miles west of Chicago.
However, the company is facing legal action from a suburban government entity seeking to gain control of a property.
The village of Bloomingdale has spent more than $5.6 million to acquire former department stores and land near the Stratford Square Mall, and this year filed a condemnation lawsuit against Namdar, which currently owns the mall’s interior and a JCPenney store on the premises.
