CIM Group has acquired a troubled retail centre in downtown Chicago.
The Los Angeles-based real estate fund manager bought the asset, known as Block 37, for $84 million from Bank of America, according to data provider Real Capital Analytics. Eastdil Secured listed the property.
Block 37 is a 275,000-square-foot retail centre located along the State Street retail corridor in Chicago’s Central Loop. The five-storey property was named for one of the original Chicago city blocks established in 1830. Although the centre has such tenants as Anthropologie, Sephora, Disney, Eileen Fisher, Zara, Magnolia Bakery and Puma, Block 37 is considerably under-leased as those tenants only occupy roughly 30 percent of the property.
Various media reports have revealed that Block 37 had faced a myriad of problems since its development. Developer Joseph Freed & Associates failed to lease up the property in a timely manner, which resulted in a consortium of lenders led by Bank of America foreclosing on the centre one month before it was scheduled to open in 2009. Of course, this led to retailers being even more skittish about leasing space at Block 37.
In March 2011, the property was sold at auction to Bank of America for $100 million. The purchase price represented less than half the face value of the original $205 million construction loan and officially brought to an end Joseph Freed & Associates’ involvement in the property.
CIM said in a statement that it plans to lease up the building, which currently is 70 percent vacant, to both national and local retailers. A spokesman for CIM declined to comment on how it plans to rent out the remainder of the property.
Separately, the acquisition comes at a time when CIM has been particularly active in the market. The Wall Street Journal reported on Wednesday that the firm had joined a group of creditors, including The Related Cos. and HFZ Capital, in winning control of New York’s One Madison Park. The nearly complete 50-storey glass condominium tower, which had been tied up in court proceedings for more than two years, had attracted numerous developers since it defaulted on its debt in 2009. Sales of the 55 unsold units could start by the end of 2012.