The Former Sears at Lloyd Center Mall Is Riddled With Debts

Address: 1260 NE Lloyd Center

Year built: 1959

Square footage: 142,966

Market value: $5,541,310

Owner: CAPREF Lloyd Center East LLC

Property tax owed: $494,523.33

How long it’s been delinquent: Since 2019

What those taxes could buy: Six more cops to patrol the Lloyd District

Why it’s delinquent: Lenders foreclosed on the mall.

Lloyd Center Mall is on life support. Injured years before, the mall went critical during the pandemic as shoppers stayed home in droves. KKR Real Estate Finance Trust, the lender that helped Dallas-based Cypress Equities finance the place back in 2015, foreclosed in December 2021 after Cypress stopped making loan payments.

But a funny thing happened on the way to bankruptcy court. Cypress had a different lender on one piece of the mall, the part that used to be Sears.

Sears Roebuck & Co. bought the space in 1999, according to property records. CAPREF Lloyd Center East LLC, an affiliate of Cypress, bought the space from Sears in 2016 as part of its plan to revive the entire mall, with, among other things, a smaller ice rink (go figure) and a fancy new spiral staircase.

The lender on the Sears space is a Salt Lake City company called Keystone National Group. CAPREF got a $7,526,520 loan from Keystone in March 2017, according to a copy of the loan agreement filed in Multnomah County Circuit Court.

But the multimillion-dollar mall renovation didn’t work. The Sears store closed in 2018. Then the pandemic hit, and the mall went into a death spiral that matched its staircase. Keystone sued Cypress for nonpayment in March.

County records show CAPREF stopped paying property taxes on the Sears parcel in 2019. Unlike KKR, which has stayed current on its part of the mall, Keystone National hasn’t paid any property taxes, Multnomah County tax records show.

Brandon Nielson, the Keystone executive who signed the loan document, says Cypress is responsible for the tax because Keystone doesn’t own the property, and that’s because the foreclosure is being held up by the bankruptcy of Regal Entertainment Group.

To settle a 2015 dispute about parking at the Regal Cinemas across Northeast Multnomah Street, CAPREF agreed to build Regal a new theater in the east end of the mall, court documents show. If CAPREF failed to do that by Oct. 1, 2020, it would have to pay Regal $10 million, Regal asserts in court documents. The theater was never built, Regal is now bankrupt, and creditors are eyeing that $10 million from CAPREF.

“Unlike KKR, which has been able to foreclose and take ownership of the mall, we have been unable to foreclose on the property to gain ownership,” Nielsen says in an email. “The current owner should be responsible for the property taxes.”

That would be Cypress, and it didn’t return calls or email seeking comment.