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CHICAGO-StreetMac has aligned with Urban Retail Properties LLC, of Chicago, to look into acquisitions of distressed mall properties. Northbrook, IL-based Streetmac executives say the economy has created substantial opportunities for Urban to expand the properties it owns and manages. David Jackson, president and CEO of Streetmac, will advise Urban, identifying prime retail targets.

“Loans are becoming due at a time when the retailers are all but stopping their expansions and closing stores,” Len Tobiaski, Urban’s president and COO, tells GlobeSt.com. “There seems to be an imbalance of debt to value which is where the opportunity lies. Because StreetMac and Urban have such solid track records in their respective experiences, it is an opportune time to take advantage of the existing distressed retail market.”

Tobiaski says economic conditions have halted retail development, as many businesses are opening fewer new locations and considering consolidations of existing stores. As stores limit their growth and closings increase, cash flow decreases at malls, only adding pressure on the owners and their debt.

“As lenders and investors in CMBS paper look for alternatives, the StreetMac/Urban option will be far superior to the alternatives of liquidations at rock-bottom prices or work-outs with existing sponsors which simply defer the problem to a later date,” Jackson says.

There is no specific number of properties, size range or budget associated with Urban’s acquisition plans. Instead, properties will be acquired as opportunities present themselves, based on current owners desire to avoid bankruptcy or foreclosure. Jackson added that now is an ideal time for such value-add acquisitions, much more so than in previous years.

“Now with the markets repricing real estate to long term sustainable trends, acquisitions make sense for those with a strong capital base combined with the property management, leasing and redevelopment skills to maximize performance,” Jackson tells GlobeSt.com. “In the mall sector, there are very few that can do that since most of the main players have issues with their own portfolios. Urban on the other hand is not burdened with portfolio issues and is among a handful of national players of adequate size that brings the combination of fresh capital, experience and track record that the market needs.”

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