Bank forecloses on Simone’s Post Road Plaza in Port Chester

A bank has filed a $15.75 million foreclosure action against Post Road Plaza in Port Chester and accused co-owner Joseph Simone of falsifying a Covid-19 hardship declaration to delay the foreclosure.

Wilmington Trust, Delaware, sued Simone and Post Road Realty Feb. 18 in Westchester Supreme Court, asking for the appointment of a receiver and a decree to sell the shopping center at 260-262 Boston Post Road.

Simone Development Companies, the shopping center operator, responded in a prepared statement that the hardship declaration was accurate and that the lender was unwilling to negotiate a reasonable financial workout, instead using the pandemic “as an opportunity to extract even more money from the property.”

The nearly 60,000-square-foot shopping center is near the Port Chester interchange of Interstate 287 / Cross Westchester Expressway. It features a LA Fitness gym, Mattress Firm store and several restaurants.

Post Road Plaza is part of the Simone Development Companies real estate realm in the Bronx, managed by Joseph Simone, and owned  by Pat and Joseph Simone and a family trust.

In 2017, the company consolidated and refinanced two loans for $15,750,000 with Natixis Real Estate Capital, Manhattan. Simone, according to the complaint, personally and unconditionally guaranteed the new loan.

Natixis quickly assigned the loan to Wilmington Trust.

Wilmington claims that Post Road Realty stopped making full monthly loan payments in May 2020, triggering a default.

Simone Development said that the anchor tenant, LA Fitness, ceased paying rent after the government ordered gyms to close during the early days of the Covid-19 pandemic. Other tenants, including two restaurants, also struggled to pay rent as their businesses declined sharply.

Simone Development intended to make good on its loan payments, the company said, and “simply asked for time to catch up after the tenants were allowed to reopen and cash flow resumed.” But the lender, the company says, was unwilling to temporarily postpone the loan payments.

Last October, Simone signed a Covid-19 hardship declaration, under a state law that allowed real estate businesses with ten or fewer commercial units, occupied or available to rent, to suspend foreclosure actions until Jan. 15.

Simone certified that Post Road Realty was experiencing financial hardship, was unable to pay the mortgage in full because of the impact of the pandemic, and owned ten or fewer commercial units.

The shopping center actually has 12 units, Wilmington says, of which 8 were rented and four were available for immediate occupancy.

Wilmington accused Simone of deliberately making a false representation, “under penalty of law,” to qualify the shopping center for relief and bar the bank from filing for foreclosure for nearly three months.

Simone Development claims that the four unrented units were not available for immediate occupancy.

Now the bank is demanding payment of the entire $15,750,000 loan principal, accrued interest and default interest totaling 8.32% and compounding monthly, and other fees and expenses for a total debt that “will be calculated and updated at the appropriate stage of this action.”

But except for “exorbitant default interest and workout fees,” Simone Development said, the loan servicer has enough cash from rents it controls to make the mortgage payments.

“We will fully defend our position against the unwarranted legal action,” Simone Development said, “and remain hopeful that a reasonable workout agreement will be reached.”

Wilmington is represented by Manhattan attorneys Rishi Kapoor and Arie Peled.