Simon and KKR ignore Chicago malls loan payments

Simon Property CEO David Simon and Gurnee Mills, and KKR Co-CEO George Roberts and Yorktown Center (Getty, Wikipedia, KKR, Yorktown Center)

As the coronavirus crisis accelerated the retail apocalypse, mall owners across the country have fallen behind on their mortgage payments. Even the Mall of America in Minnesota, the nation’s largest mall, has missed recent payments on its $ 1.4 billion loan.

Now, two large Chicago-area malls, separately owned by Simon Property Group and a company run by KKR, have both missed May debt payments, according to Crain’s. Retail stores, Gurnee Mills and Yorktown Center, are both closed due to pandemic restrictions, although Yorktown Center is expected to open this weekend.

Simon skipped his $ 1.3 million payment in May on the $ 257 million mortgage for Gurnee Mills; and the KKR firm with Pacific Retail Capital Partners missed its $ 333,000 payment on a $ 107 million mortgage for Yorktown Center, according to Crain’s. Both are CMBS loans.

Simon has reopened nearly 50 shopping centers across the country in recent weeks.

Another area point of sale, Louis Joliet shopping center, defaulted on April and May mortgage payments on an $ 85 million loan, according to the report.

The nearly 2 million square feet of Gurnee Mills – among the largest malls in the Chicago area – have been suffering in recent years after losing Sears and Toys “R” Us stores. And even before the coronavirus, the company KKR was having trouble refinancing its mortgage on its 1.4 million square foot mall, Crain’s reported.

The stress caused by the coronavirus on retailers – which has led to many bankruptcies in recent weeks – has implications for the commercial mortgage-backed securities market, which distributes loans through bonds. The Financial Times reported that more than one in five loans grouped in commercial mortgage-backed securities are currently on “watch lists” registered by mortgage service companies. [Crain’s] – Alexi Friedman

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