It’s been a tough year for the North Riverside Park Mall, which has spent 2020 weathering a prolonged shutdown due to a pandemic, civil unrest that resulted in looting and a second shutdown, two shootings, the closure of Sears and the uncertain future of J.C Penney.
Late this summer, the shopping center’s lender added foreclosure to the mix.
The Landmark has learned that on July 30, a company called JPMBB 2014-C24 West Cermak Road LLC filed a complaint in the Chancery Division of Cook County Circuit Court seeking to foreclose on a $75 million loan given in 2014 to the mall’s owner, North Riverside Park Associates LLC, which is affiliated with The Feil Organization.
The Feil Organization operates malls and shopping centers in four states, including Illinois, Indiana, Louisiana and New York. The firm acquired North Riverside Park Mall in 2004.
North Riverside Park Associates owns a little less than half of the roughly 1 million-square-foot shopping center. Its three large anchor spaces are owned independently.
Fears of foreclosure have dogged North Riverside Park Mall for months. In March, the mall’s lender disclosed in a filing with the U.S. Securities and Exchange Commission that North Riverside Park Associates LLC’s loan was in default after the company failed to make a roughly $68 million balloon payment due Oct. 6, 2019.
Also troubling was news that in November 2019, the mall property was appraised at $48.8 million, far below the amount owed on the mortgage.
Mall officials earlier this year pointed to a Cook County Assessor valuation of $85.3 million for the property and said they were continuing to work with the lender to avoid foreclosure.
“We’ve been negotiating with the lender for the past six to eight months,” said North Riverside Park Mall general manager Harvey Ahitow in March. “We have a new proposal in that we’re waiting to see the result of. We’re going to get this done. It’s just a matter of time.”
The foreclosure action does not mean a deal can’t be worked out, and in a recent SEC filing, the lender noted that while the foreclosure action makes its way through the courts, they would be “simultaneously continuing discussions with the borrower until a resolution is reached.”
Ahitow did not respond to phone and email messages from the Landmark seeking comment on the foreclosure action.
J.C. Penney strikes sale deal
With Carson, Pirie, Scott shutting its doors in 2018 and Sears announcing it would be doing the same this month, news in May that J.C. Penney was seeking Chapter 11 bankruptcy protection ignited fears that North Riverside Park Mall could be left with no retail anchor tenants should Penny’s be liquidated.
However, the 118-year-old department store chain, and the North Riverside location with it, appears to have been saved for the moment.
On Sept. 9, J.C. Penney announced it had agreed in principle for its assets to be purchased by Simon Property Group and Brookfield Property Group, a pair of shopping mall operators whose properties include a number of J.C. Penney stores as anchor tenants.
Also involved in the $1.75 billion deal are a group of J.C. Penney’s creditors. Simon/Brookfield would acquire J.C. Penney’s retail and operating assets, while creditors would form a real estate investment trust that would include 161 properties and all of J.C. Penney’s distribution centers.
An SEC filing on Sept. 10 laid out the terms of the master lease for those properties, but the properties to be owned by the real estate trust were not identified. That same filing included a business plan that indicated J.C. Penney intended to operate 653 stores going forward.
When it announced bankruptcy proceedings in May, J.C. Penney operated close to 850 stores. The company identified 156 stores for closure in 2020; those closures are under way.
But the business plan in the most recent SEC filing also indicates the company plans to close 37 more stores in 2021. The filing did not identify which stores would be on that list, and indicated that number could change depending on conditions.
A bankruptcy court filing on Sept. 10 suggested that the sale of J.C. Penney’s assets would be completed by the end of the month.