Two Mall Owners Offer to Save Bon-Ton with Buyout

Bon-Ton is on the verge of closing all its’ department stores after filing for bankruptcy. The cost to buyout? $128 Million.

bon-ton buyout

Namdar Realty Group and Washington Prime Group have come together to offer the $128 million cash bid to buy Bon-Ton Stores out of bankruptcy.

Bon-Ton filed for Chapter 11 bankruptcy in February 2018. The bidders are looking to purchase Bon-Ton through a court-supervised bankruptcy sale process. Following Bon-Ton’s actions to file bankruptcy, several entities have been interested in buying out Bon-Ton and liquidating the stores. The investor group and Bon-Ton are preparing to finalize their asset purchase agreement which needs to happen before the auction currently scheduled for April 16, 2018.

The courts also approved the $500,000 work fee paid by the investor group, in order to cover the due diligence cost.

No comment has yet been made by either Washington Prime or Namdar Realty.

The details of the buyout

Namdar Realty and Washington Prime would acquire nearly all of Bon-Ton’s assets. There is one exception, a 743,600 sq. ft. distribution center located at 115 Enterprise Parkway, West Jefferson, OH. AM Retail Group Inc. would buy this exception property separately.

Bon-Ton is currently Washington Prime’s tenant in 15 properties. The size of these properties totaling 1.48 million square feet. In addition, Bon-Ton is also a tenant of Namdar Realty in 13 properties.

There are 250 stores operated by Bon-Ton in 23 states across the United States.


According to Morgan Stanley Research analysts, Ronald Kamdem and Richard Hill, Washington Prime and Namdar Realty’s bid makes complete sense due to several reasons. If the investors were to lose their tenant, Bon-Ton, their malls’ cap rates would most likely widen if given the risk of co-tenancy and capex requirements to redevelop.



In addition, the investors could be positioning the move in order to place the Bon-Ton stores where they have big box vacancies in their malls.


“We can’t help but think this would be a competitive advantage for these two mall landlords relative to their peers,” said the two analysts. “First, they could choose to keep open stores at their properties while closing others at competing locations. Second, it could provide them an opportunity to buy malls from their competitors at more attractive valuations if there is a risk of losing a major tenant.”


The Retail Property Management Market is Changing

The retail market is changing, and commercial real estate managers are significantly adding to property value.

Retail Property Management - Commercial Real Estate

With the understanding of their tenants’ business, commercial real estate managers are driving immense value in retail assets. It has become obvious that retail properties which are successful, are made from successful retail tenants. However, there is more to it than simply finding a daily-needs anchor that promises internet resistance.

Perfect example…recently, a five-building automotive retail property traded hands in Chula Vista for a whopping 176% over the original investment. The property is located in a retail-zoned corridor. This type of location is rare for automotive properties today, which of course made it that much more of a desirable opportunity. Although the property was rare due to zoning, it was the property management team that was integral in driving value. Thus, turning the failing and mostly vacant asset into a profitable automotive center.

CMBS (Conduit) Loan Defeasance Drops Rapidly

February 15, 2018

A CMBS Loan, also known as Conduit Loan, is a type of commercial real estate loan secured by a first-position mortgage on a commercial property. These loans are packaged and sold by Conduit Lenders, commercial banks, investment banks, or syndicates of banks.

The legacy CMBS market has been shrinking rapidly, which has affected defeasance activity profoundly. Last year, only 449 CMBS loans ($6.4 billion) were defeased. Compare this to 2016, where 1,059 loans ($15.9 billion) were defeased.

Why did the number of defeasances drop?

Last year, market conditions were perfect for defeasance transactions. However, there simply was not very many loans to defease. When interest rates are low, and property values high, we see higher defeasance activity. This was what happened in 2016.

Between 2013 and 2016, a spike of defeasances occurred when approximately $70.6 billion of loans were replaced by government securities.

This increase in defeasance activity occurred simultaneously with the CMBS Wall of Maturities.

What fuels the defeasance fire? Maturing Debt.

Bottom line, there are fewer maturities, so there are fewer defeasances. This is best explained when looking at the financial crisis that happened almost a decade ago. After the fall, so to speak, not as many CMBS loans were issued.

The decline of maturities = The decline of defeasances.

What is the expectation?

Steadiness. This expectation isn’t a strong one when looking at the scarce amount of loans issued in the last 10 years, following the 2008 financial crisis. Let’s break the numbers down…

2008 – $12.1 billion of loans

2009 – $3.6 billion of loans

2010 – $11 billion of loans

The Big Variable

In short, expectations of major interest rate hikes. Rate increases motivate borrowers to “lock in” current rates, as well as defease existing loans. However, for this to happen, the increases would have to be dramatic. 1% is not enough to scare a borrower into completing these transactions. Instead, it would have to be a much higher number that would cause them to defease, even if they only had a few years left on the existing loan.

Prepay or Defease?

Securitized commercial mortgages are usually structured with prepayment restrictions. This is to make sure that the lenders receive the cash flows that were expected for the life of the loan. If a borrower decides to pay off their loan before it becomes available to prepay, they could face serious penalties. These payoff cases typically happen when there is a sale of the property or a dramatic drop in interest rates.

Alternatively, the borrower could replace their mortgage collateral with government securities that copy the mortgage’s cash flow. In short, the lesser amount of time left on the loan, the lower the cost to defease. As with the opposite, the longer amount of time remaining on the loan, the more it will cost to defease. This is why most wait until the last two years of the maturity of the loan to defease.

If you have questions on defeasement or the maturity of your loan, contact RESolutions to guide you to the most appropriate steps for your situation.

Chase Bank Building In Downtown Kenosha

This 2-story, 36,500 square foot multi-tenant office building in Kenosha’s vibrant downtown area is anchored by Chase Bank. With 50% occupancy, the property is an excellent value-add opportunity with a going-in cap rate in excess of 8%.

Built-Out Office Space For Lease

April 1, 2017 – Up to 4,500 sqft of space available now in Kenosha, WI and Gurnee, IL:

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FOR LEASE: Gurnee Medical Office

Join various medical tenants in this beautifully landscaped professional building with immediate availability and flexible size range.  Located in Lake County, one block east of Route 41, with easy access to I-94.

RESolutions News 2/2017

February 15, 2017 – RESolutions nabs five (5) new management assignments and promotes Saar Schnitman to Senior Director of Property Management & Leasing.

commercial real estate management - chicago



RE|SOLUTIONS announces new property management assignments in:

Evergreen Park

Melrose Park

Orland Park

Benton Harbor, MI



Saar Schnitman 

Real Estate Senior Director

Property Management & Leasing

Contact us to learn how you can easily monetize your real estate network by referring business to us.

RE|SOLUTIONS is now looking to hire an assistant for our Property Management division. 

Contact Brian Goldman for more info:


Property Management & Leasing


  Send us an Email

Phone: (312) 257-3252


79 W Monroe, Suite 905

Chicago IL 60603

                                                        New Assignments: Five New Properties

“We’re seeing a big uptick in acquisitions by savvy investors from the east and west coasts that demand sophisticated, professional management”, S.L. van der Zanden, Managing Principal.  80% of our new business has come through our Referral Rewards program which compensates for deals sent our way”. 

commercial real estate management listings

Announcing: Promotion

Saar Schnitman

Real Estate Senior Director

Property Management & Leasing

saar schnitman - commercial real estate senior director

RE|SOLUTIONS is pleased to announce that Saar Schnitman has been promoted from Director to Senior Director of our Property Management and Leasing Divsions. 

In his new position, Saar will take on oversight of our recently expanded portfolio and new staff hired to manage our properties across the Central US region. 

Please note:  This is an opt-in newsletter and is only received by those who joined it or have had interactions with RE|SOLUTIONS EMR.  RE|SOLUTIONS EMR respects your privacy and will never share your email address or any other personal information with anyone.


Value-Add Multi-tenant Office Building in Kenosha

This 8-story, 35,000 square foot multi-tenant office building in Kenosha’s vibrant downtown area is available and includes a 144 unit parking structure. Currently, the property is 58% occupied with long term tenants and provides excellent value-add potential with a pro-forma cash-on-cash return in excess of 20%.

Downtown Kenosha Mixed-Use Stabilized Portfolio

Five fully leased mixed-use, 2 story properties located in the heart of Downtown Kenosha. The portfolio contains a total of 11 commercial and residential tenants (74% commercial / 26% residential).  Stable-cash flow in rehabbed buildings.

FOR LEASE: North and Harlem Plaza in Oak Park

Join Orange Theory and American Mattress in the last space available! Located at the SE hard corner of North and Harlem Avenues – the primary commercial corner in the local trade area.