A Brookfield Real Estate Partners venture has secured a $ 475 million refinancing of the second largest mall in the Chicago area.
Morgan Stanley provided the debt package on the 2.2 million square foot Oakbrook Center, according to Crain’s. A subsidiary of the California Public Employees’ Retirement System owns the mall along with Brookfield.
The debt includes a mortgage of $ 319 million and a mezzanine loan of $ 156 million. This pays off the existing $ 425 million loan, with some of the remaining amount to be used for upgrades on the sprawling space, Crain noted, citing a report from Fitch Ratings.
The debt package is the largest refinancing of a commercial building in the Chicago area since June 2018. It was at this point that the owners of the Aon Center The downtown Chicago office tower took out a loan of $ 678 million, according to Real Capital Analytics.
A spokesperson for Brookfield Retail Properties, which manages Brookfield’s portfolio of shopping centers, declined to comment.
Shopping malls have been hit by the pandemic, as has the large retail sector. A growing number of shopping center owners are falling behind on their loans, and some have given up. Starwood Business Partners hands over the keys to the Louis Joliet shopping center to its lender, after a first default on a loan in the spring.
Oakbrook Center is surrounded by affluent residential and suburban office neighborhoods, but has its own issues. Its tenant list includes several struggling retailers like Macy’s, Neiman Marcus, Victoria’s Secret, AMC Cinema and The Gap. The mall is 82% occupied and tenants paid 80% of the rent owed in September, according to the report, citing Fitch. Brookfield has allowed its troubled tenants, including AMC, to defer their rent.[Crain’s] – Akiko Matsuda