UPDATED March 3, 2022, 1:35 p.m.: Joe Simone’s pandemic-ravaged shopping center in Port Chester could be sold off as a bank has filed a $15.75 million foreclosure action against the retail hub.
Wilmington Trust sued Simone and Post Road Realty in Westchester Supreme Court last month, according to the Westchester & Fairfield County Business Journals. The bank is asking for the Post Road Plaza shopping center at 260-262 Boston Post Road to be sold and for a receiver to be appointed.
In 2017, Simone Development Companies consolidated and refinanced two loans with Natixis Real Estate Capital for $15.75 million. The loans were personally guaranteed by Joe Simone and assigned to Wilmington.
According to Wilmington, Post Road Realty stopped making monthly loan payments in May 2020, resulting in a default. Simone, whose tenants had skipped rent payments during pandemic shutdowns, responded with a Covid-19 hardship declaration, which allowed for the suspension of foreclosure action against the property.
Wilmington alleges the shopping center has too many commercial units to qualify for hardship under state law. A Simone Development representative told The Real Deal that the application required that the property contains 10 or fewer units occupied or available for rent. “We had eight, with four units that were unoccupied and not available for immediate occupancy,” the representative said.
In any event, the center’s declaration prevented Wilmington from filing for foreclosure for almost three months.
Meanwhile, debt is piling up. In addition to the loan principal, Wilmington is seeking accrued interest and default interest totaling 8.32 percent and compounding monthly, as well as other fees and expenses, according to WestFair Online.
“The foreclosure action brought against us is tied to the unwillingness of the lender to negotiate a reasonable financial workout plan and [an attempt] to extract exorbitant fees for a short deferment in monthly payments during the early part of the pandemic when tenants were shut down and stopped paying rent,” the Simone official said.
The 60,000-square-foot shopping center in Port Chester includes an LA Fitness gym, Mattress Firm store and a number of restaurants. Many fell behind on rent when they were closed during the initial surge in Covid cases.
“While the loan was not unconditionally guaranteed, we had no intention of not making good on the payments,” Simone’s statement said. “We simply asked for time to catch up after the tenants were allowed to reopen and cash flow resumed.”
Last month, Simone had a more positive experience in the market, buying most of an 81,000-square-foot commercial condo building at 459 East 149th Street in the Woodstock neighborhood of the Bronx for $32 million. Triangle Equities was the seller of the condo, which included 49,750 square feet of retail and office space and 47,000 square feet of parking.
This story has been updated with a response from Simone Development Companies.
[WestFair] — Holden Walter-Warner