Struggling Evergreen Park mall hits market after loan sale fails
(Crain’s, November 25, 2014) – The foreclosure process for one of the oldest—and emptiest—malls in the Chicago area has restarted after a deal collapsed that would have given a Florida real estate developer control of a loan on the property.
Tampa-based DeBartolo Development last year said it would buy a defaulted loan on the Plaza, a 733,986-square-foot mall near 95th Street and Western Avenue in Evergreen Park.
But the loan sale fell apart, confirmed S.L. Van der Zanden, CEO of Resolutions, a Chicago-based company that’s serving as a court-appointed receiver for the mall during the foreclosure process.
The servicer of the loan, Houston-based Situs Holdings, is now forging ahead with the foreclosure and has hired a broker to sell the property, said Van der Zanden.
The loan sale closing date “was extended numerous times and the decision by Situs at this point in time was, they’d prefer not to provide additional extensions on the contract,” he said. “So the contract expired.”
Van der Zanden said he didn’t know why the loan sale fizzled. DeBartolo representatives did not respond to messages. A Situs spokesman declined to comment.
MOSTLY EMPTY MALL
The Plaza, which currently has just four tenants and more than 458,000 square feet of empty, enclosed mall space, is owned by a group of investors led by Kansas City, Mo.-based Provo Group, which is said to be cooperating with the foreclosure. Bruce Provo, president of his namesake firm, said his group is cooperating with Situs, and has agreed to give up the property.
DeBartolo’s loan purchase was the first step the firm needed to ultimately take over the mall, demolish it and redevelop the 30-acre site with a $112 million shopping center. In a statement, the firm said it didn’t acquire the loan because it is busy working on other projects.
“After evaluating the opportunity, we decided to focus our resources in the Chicago market on the Optima towers downtown,” the company said in the statement. “We are in the process of beginning construction on a 1.4 million-square-foot regional shopping center in Kapolei, Hawaii, and didn’t want to add any additional regional centers at this time.”
In October, the Village of Evergreen Park signed a memorandum of understanding regarding a redevelopment plan with UP Development, a real estate firm based in suburban Nashville.
The village will negotiate “exclusively” with UP over the redevelopment of the Plaza site through Jan. 31, including over a financial-incentive package for a 440,000-square-foot project on the site, according to a copy of the document.
Under the terms of the memo, the village says it will consider providing UP with around $10 million in funds raised through a new bonding district on the property, provide a sale-tax reimbursement to the firm and issue other incentives.
Evergreen Park Mayor James Sexton said the village wants to work with UP and won’t negotiate over incentives if a new buyer emerges to buy the property. He said UP was partnering on the project with DeBartolo, which the Tampa-based firm shot down in their statement.
“If we don’t get it going soon, and if we don’t get it going soon with the people we’ve talked to for two years, we’re out,” he said.
“It’s a remarkably urban, in-fill and probably mostly retail redevelopment site,” said Ben Wineman, principal at Mid-America Real Estate, the Oak Brook-based brokerage selling the Plaza. He expects a future owner will seek to demolish the existing mall, given its age and how it is configured.
No buyer has been picked for the mall, he said.
“It’s a wide open playing field” right now, Wineman said.
The Plaza currently has just four tenants, according to Mid-America marketing materials: a Carson Pirie Scott department store, a Planet Fitness gym, an Applebee’s restaurant and an Enterprise car rental office.
Carson has extended its lease until 2023, and the gym has a lease for its space until 2021, according to the materials. That could complicate plans developers might have to raze the mall and build anew, since those tenants would have to be accommodated in the project or bought out of their leases.
The Plaza was developed by famed Chicago developer Arthur Rubloff in the early 1950s. Later, he converted the property into an enclosed mall, one of the first in the area.