Rimrock Mall is under new management after Starwood Capital, the mall’s previous owner, worked out a deal with its bank to transfer ownership and avoid foreclosure.
Wells Fargo Commercial Mortgage Trust held Starwood’s loan, which was at $72.7 million when the two reached a deal last fall, according to a report in Commercial Real Estate Direct. In 2020, Rimrock Mall was valued at $50 million. Starwood purchased the mall is 2013 for $112 million.
Under the new deal, Starwood agreed to hand over the deed to Wells Fargo, saving Starwood from having to declare bankruptcy, a practice known as a deed-in-lieu of foreclosure transfer. The loan is now with Rialto Capital Advisors, according to Commercial Real Estate Direct.
Taking over management of the Billings mall is Jones Lang LaSalle, Inc., or JLL, a commercial real estate services company based in Chicago. JLL is currently listing space at the mall for lease.
People are also reading…
Starwood, also based in Chicago, purchased Rimrock Mall in 2013 and almost immediately worked to distance itself from the traditional mall concept and move closer to becoming a mixed-use retail center that included community space, entertainment, activities and hospitality.
Most notably, Rimrock courted Magic City Gymnastics in 2018 to open a studio at the mall after Billings City Council denied the gymnastics group permission to build a location south of a neighborhood on Shiloh Road. And Freefall Brewery build a brew pub at the mall.
Still, it wasn’t enough. By the end of 2018, Herberger’s department store, one of the mall’s anchors, had pulled out after its parent company declared bankruptcy. Just over a year later, the COVID-19 pandemic hit.
Rent at the mall declined 10% with Herberger’s departure, Commercial Real Estate Direct reported. At the same time, expenses, including real estate taxes increased.
Those factors resulted in a 23% drop in net cash flow for the mall. In 2017, Rimrock’s net cash flow was $5.46 million. By 2019 it had dropped to $4.28 million, according to Commercial Real Estate Direct.
The drop continued as the pandemic reached full swing in 2020. By that point, the mall was only pulling in $2.69 million, which was 40% short of what was needed to service the loan, according to Commercial Real Estate Direct.
In Midtown Billings, the West Park Promenade at 1700 West and Grand Avenue has been thriving again with the recent opening of the Town and Country grocery store. The former West Park Mall on that lot was mostly torn down beginning in 2013, with the mall subdividing into separate businesses all with street-side entrances.