WILL IT EVER END? SKY LAS VEGAS PRESIDENT, M Aaron Yasahouafar, Screws Capmark Bank in Oklahoma City..Who is next?
OKLAHOMA CITY, OK -- Capmark Bank claims the out-of-state owners of downtown’s landmark First National Center owe more on the property than it is actually worth and will be unable to emerge from Chapter 11 bankruptcy because its largest tenant, Devon Energy, plans to move out when construction is completed on its new 50-story world headquarters.
Capmark, First National’s lender, is asking a U.S. Bankruptcy Court judge to allow it to continue to try to gain control of the center through the state court system on the grounds the buildings’ owners have no equity in the property and will not be able to reorganize, according to a motion filed Dec. 3 in the U.S. Bankruptcy Court for the Western District of Oklahoma.
Capmark claims the nearly 80-year-old art deco First National Center at 120 N. Robinson Ave. is worth significantly less than the $21 million balance of the note on the building.
U.S. Bankruptcy Court Judge Niles L. Jackson has yet to rule on the matter.
Capmark was in the process of foreclosing on First National and an Oklahoma District Court judge was about to appoint a receiver to take over day-to-day operations at the property when the center’s owners filed for bankruptcy in October.
Devon leases about 41 percent of the occupied space in the First National Center and accounts for about 50 percent of the monthly rental revenue on the property, Capmark claims.
Capmark claims in court documents that the energy company’s lease expires in September 2013. Devon leases about 227,835 square feet of office space in First National. The company plans to move all of its employees into its new building two blocks away from First National after the construction on the building wraps up at the end of 2012, said Alesha Leemaster, a spokeswoman for Devon.
“We have not been asked to help to find new tenants there and it would not be appropriate for us to do so at this time,” Leemaster said.
The company has been in communication with the owners of several downtown office buildings where it leases space about its intentions to build a new headquarters since 2008, she said.
Capmark is also fighting First National’s owners’ ability to renew its tenant’s leases and enter into new leases. Capmark has filed an objection with the bankruptcy court to First National’s request to enter into new leases with tenants on the property.
Several First National tenants’ leases have expired or are about to expire at the end of December, according to court documents. First National’s owners filed a motion in November, requesting permission from the court to enter into new leases with its tenants, after it was unable to come to an agreement on its leasing program with Capmark.
“The debtors are concerned that any further delay in the debtor’s ability to renew existing leases or enter into new leases for space within the property will result in the loss of current and prospective tenants,” First National said in court documents.
Capmark has objected to First National’s leasing program because it lacked adequate credit checks for potential tenants and restrictions on tenant improvements, among other reasons, according to court documents.
The Oklahoma Foundation for Excellence, which leases about 2,700 square feet of office space at First National, has a lease that expired on Oct. 31.
The nonprofit has had its offices at First National for more than a decade and has no plans to leave, foundation director Emily Stratton said. The organization is in the process of negotiating a new lease, she said.
“We love being in this building and we hope everything comes together smoothly,” Stratton said. “This is kind of a nerve center of downtown.”
The Oklahoma Department of Securities’ lease on more than 11,400 square feet of office space at First National expires on Dec. 31. The state agency has no plans to move and intends to renew its lease at First National, administrator Irving Faught said Tuesday.
The Oklahoma Aeronautics Commission, which takes up about 3,200 square feet of office space at First National, also had a lease that expired on Nov. 30, according to court documents. The commission has renewed its lease through the end of the year through the state’s leasing office and also does not intend to move, said Elaine Spell, chief operating officer for the commission.
Calls to Los Angeles attorneys David Neale and Juliet Oh, who are representing First National’s owners in the bankruptcy, were not immediately returned on Tuesday. Aaron Yashouafar, chief executive of Los Angeles-based Milbank Real Estate, which is part of the partnerships that own the First National Center, also could not immediately be reached for comment.
The partnerships First National Building I and First National Building II, both associated with Milbank Real Estate, bought the First National Center in 2006 for $21 million.
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