Loan problems dog lifestyle center
Crain's Chicago Business reports: After losing two of its largest tenants to bankruptcy, a big shopping center in Algonquin that opened five years ago now faces financial problems of its own.
Algonquin Commons, a 565,000-square-foot mall in the northwest suburb, is no longer generating enough cash flow to cover its loan payments. Its owner, a joint venture led by Oak Brook-based Inland Real Estate Corp., wants to restructure $92.1 million in debt on the property.
It is the largest local retail property to run into loan trouble in the current real estate slump.
Revenue at Algonquin Commons has fallen over the past year or so because of the deteriorating retail climate and the demise of its second- and third-largest tenants, Wickes Furniture Co. and Circuit City Stores Inc., which have liquidated after filing for Chapter 11 protection last year.
The property, at 1812 S. Randall Road, was 91% occupied at the end of September, down from 99% when the Inland joint venture bought it in 2006.
Algonquin Commons “has been impacted by the bankruptcies of Wickes Furniture and Circuit City and we are actively working to re-tenant those spaces,” an Inland spokesman says in an e-mail. “We also are looking to improve our position at the asset through negotiations with the lender.”
Though the Inland joint venture is current on loan payments, the property’s net cash flow fell to 0.95 of its debt service obligation in the nine months ended Sept. 30, according to a recent report by the special servicer.
The venture says “that due to the market conditions and property-specific conditions,” the mall is “unable to continue supporting monthly debt service,” the report said.
A growing number of retail landlords in the Chicago area face similar problems as retailers shut down stores and demand rent relief.
Among all property types, retail is the biggest source of trouble locally, with $1.3 billion in distressed loans, according to a recent distressed assets report by Real Capital Analytics Inc., a New York-based research firm. Algonquin Commons is the largest local retail property on the firm’s list of troubled assets.
Completed in 2004, Algonquin Commons is a so-called lifestyle center, a high-end shopping mall with freestanding stores and sidewalks but no department stores, unlike an enclosed mall. A joint venture between Inland and the New York State Teachers Retirement System paid $154 million for the property in February 2006.
View the full article on Crain's Chicago Business: Loan problems dog lifestyle center
Posted by: Nina Turner