Lenders foreclose on Tropicana Avenue strip mall

By Steve Green

Saturday, Sept. 19, 2009 | 2:05 a.m.

A big Tropicana Avenue shopping center is among the latest casualties in Southern Nevada's commercial real estate slowdown.

Lenders are foreclosing on the Tropicana Center and the adjacent Pecos Plaza and are seeking appointment of a receiver to run the strip mall until the property is sold at auction.

The 578,000-square-foot property, at the southwest corner of Tropicana Avenue and Pecos Road, includes operating Wal-Mart and Sunflower Market stores and several small businesses.

But it's largely vacant, with retailers Guitar Center and Sheplers Western Wear among the most noticeable businesses that have closed.

Wells Fargo Bank, trustee for investors in the property's $56 million mortgage loan issued in June 2005, said in a lawsuit this week that shopping center owner Tropec LLC of Los Angeles stopped making payments on the mortgage in March.

The property at issue is at 3055 East, 3335 East and 3365 East Tropicana, the lawsuit says.

The loan was initially made by Deutsche Banc Mortgage Capital LLC and has since been sold to investors as commercial mortgage-backed securities.

The lawsuit, filed in Clark County District Court, said $55.5 million is owed on the mortgage — though a recent appraisal found the property is only worth $43 million.

"Unless a receiver is appointed, lender may be deprived of a substantial portion of the security provided for in the deed of trust and other loan documents and may otherwise lose its rights to any rents and profits and other income from the property," Wells Fargo said in its lawsuit filed Thursday.

Debt-rating agencies Standard & Poor's and Moody's Investors Service have reported occupancy at the center, initially 90 percent when the loan was issued, had dipped to 67 percent in March.