The holder of the Tulsa Promenade mall’s mortgage is seeking to foreclose on the loan, according to documents filed with Tulsa County District Court last month.

Ready Capital Corp., the original lender and current holder of the loan, alleges in court filings that the mall’s owner — a Delaware limited liability company — has defaulted on the loan by failing to make payments since March.

Ready Capital Corp. also alleges that its collateral interest in the property is diminishing as a result of the mall owner’s failure to maintain the property and a suspected failure to direct all rents to the designated “lock box.”

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Court filings claim the property’s value has seen a three-year plunge from $25.9 million in a 2016 appraisal to $4.5 million per a recent estimation by NAI Farbman.

According to the lawsuit, a property inspection in March revealed that substantial deferred maintenance remains incomplete, including items that were flagged for immediate repair in 2016 in addition to “significant deferred maintenance arising from normal wear and tear or neglect.”

The mortgage holder also states that it holds $1.4 million in repair and replacement reserves that the borrower has available, yet the borrower had only requested $165,000 in 2017 for parking lot repairs.

The March inspection, in addition to showing that roof, landscaping and parking repairs flagged in 2016 remained incomplete, found that the central elevator was out of order, several escalators were out of order, fountains were not functioning, worn seating was patched with duct tape and HVAC repairs were needed in several storefronts.

The mortgage loan is structured so that all rents paid are deposited directly into a “lock box” account and then dispersed.

The mortgage holder claims in the court documents that the mall owner failed to provide operating statements or rent rolls for January through May this year.

In a sworn affidavit in support of the mortgage holder’s motion for appointment of receiver, an asset manager for KeyBank Real Estate Capital, a loan service for the mortgage holder, stated there are more than $1.18 million in deficiencies when comparing the budgeted revenues and the lock box deposits between January and June.

The mortgage holder has since revoked the mall owner’s ability to collect any rents from the property, according to the filings.

Court filings also show the mall’s occupancy rate decreased from 90% in 2015 to 68% in June.

The property owner is seeking a total of $7.64 million as well as nearly $200,000 in various interests and fees.

The mall’s ownership filed a two-week extension on July 10 stating it “has the ability and desire to obtain capital sufficient enough to pay the subject loan in full, thus mooting this case.”

Since the first of the year, several national retail brands have left Promenade. The list includes Victoria’s Secret, American Eagle Outfitters, Charlotte Russe, Lids, and Kay and Zales jewelry stores.

Hollywood Theaters Palace 12, which was owned by Regal Cinemas, also closed this year.

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Mike Averill


Twitter: @Mike_Averill