Rimrock Mall is under new management after Starwood Capital, the mall’s former owner, reached an agreement with its bank to transfer ownership and avoid foreclosure.
Wells Fargo Commercial Mortgage Trust held Starwood’s $72.7 million loan when the pair struck a deal last fall, according to a report in Direct Commercial Real Estate. In 2020, Rimrock Mall was valued at $50 million. Starwood bought the mall in 2013 for $112 million.
As part of the new deal, Starwood agreed to deliver the deed to Wells Fargo, sparing Starwood from having to declare bankruptcy, a practice known as deed in lieu of foreclosure transfer. The loan is now with Rialto Capital Advisors, according to Commercial Real Estate Direct.
Jones Lang LaSalle, Inc., or JLL, a Chicago-based commercial real estate services company, is taking over management of the Billings Mall. JLL is space currently for sale at the mall for rent.
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Starwood, also based in Chicago, purchased Rimrock Mall in 2013 and almost immediately worked to break away from the traditional mall concept and move closer to becoming a mixed-use mall that included community spaces, entertainment, activities and of hospitality.
Most notably, Rimrock courted Magic City Gymnastics in 2018 to open a studio in 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 built a brewery at the mall.
Still, that wasn’t enough. At the end of 2018, the department store Herberger, one of the mainstays of the mall, had withdrawn after the bankruptcy of its parent company. Just over a year later, the COVID-19 pandemic hit.
The mall’s rent fell 10% with Herberger’s departure, Commercial Real Estate Direct reported. At the same time, expenses, including property taxes, have increased.
These factors resulted in a 23% drop in the mall’s free cash flow. In 2017, Rimrock’s net cash flow was $5.46 million. In 2019, it was down to $4.28 million, according to Commercial Real Estate Direct.
The decline continued as the pandemic was in full swing in 2020. At that time, the mall was pulling in just $2.69 million, 40% less than what was needed to repay the loan, according to Commercial Real Estate Direct.
In Midtown Billings, the West Park Promenade at 1700 West and Grand Avenue has flourished again with the recent opening of the Town and Country grocery store. The former West Park Shopping Center on this land was largely demolished as of 2013, with the shopping center subdividing into separate businesses, all with street-side entrances.