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Southlake Mall auction delayed again as ownership stays in limbo
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Southlake Mall

Southlake Mall auction delayed again as ownership stays in limbo

Southlake Mall auction delayed again as ownership stays in limbo

Cajun Crab House, which opened in the summer, is next to the northwest entrance of Southlake Mall in Hobart.

The auction on the debt for Southlake Mall in Hobart has been delayed a second time as its future ownership hangs in the balance.

Christopher McGlone, the managing director of capital markets and national loan portfolio sales for Cushman & Wakefield, a Chicago-based commercial real estate firm that's handling the sale of the Southlake Mall's debt, said the public auction has been pushed back again to June 17. He declined to comment further.

Debt on the mall, which is in foreclosure, was originally supposed to take place on May 13 and then on May 27.

Commercial real estate experts said that the market was weak for regional malls in the current retail environment and that such delays often took place so there would be more time to market the property and bring in bids the seller would find acceptable. Delays can occur for other reasons, such as to buy more time to restructure loans or work out legal issues or because anticipated good news would result in a higher price.

Traditional brick-and-mortar retail has been struggling, with more than 12,000 stores closing nationwide over the last decade during the so-called retail apocalypse as more consumers make more purchases online. Green Street Advisors estimates shopping malls could lose up to 60% of department store anchors by the end of the year.

Ascena Retail Group filed for bankruptcy and will close some Region stores in a move that could deal blows to the Southlake Mall in Hobart and the Lighthouse Place Premium Outlets in Michigan City, as well as other shopping centers throughout Northwest Indiana.

The Southlake Mall is currently in foreclosure in Israel. Owner Starwood refinanced its mall portolio in 2018 and then defaulted last year as a result of the coronavirus pandemic. Bondholders demanded to be repaid faster after its debt was downgraded to C- because of the impact COVID-19 had on retail.

California-based Pacific Retail Capital Partners and New York City-based Golden East Investors were installed as trustees running the mall, the largest in Northwest Indiana and the anchor of the biggest commercial trade district.

But it could change hands yet again. The Korean company Southlake 1st Co., Ltd. has been looking to auction off $50 million in debt on Southlake Mall for whatever it can get. The junior, or mezzanine, loan is subordinate to a $95 million senior loan that is also in default.

Anyone who buys the mezzanine loan at auction would then have to pay off the $95 million in senior debt to take control of the 1.36 million-square-foot mall at U.S. 30 and Mississippi Street in Hobart.

Commercial real estate experts said the foreclosure and defaulted debt will potentially result in new ownership but is unlikely to end with the mall's closure, as it is still commercial viable. Cushman & Wakefield estimates the two-story Southlake Mall is about 96% occupied, though the vacant Sears and Carson's department store space has not been filled.

See a day in the life of Portage Patrolman Brian Graves in the latest installment of Riding Shotgun with NWI Cops.

Video filmed by Kale Wilk and produced by Scotia White. Interview by Anna Ortiz.

Built in 1974, the Southlake Mall is the second largest mall in Indiana and home to around 150 stores, including Macy’s, JCPenney, Dick’s Sporting Goods, H&M and Books-a-Million. It also has an AMC multiplex theater and restaurants like Cajun Crab House and Cooper's Hawk.

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.

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