A delinquent mortgage taken on the lease of a Commack shopping center will be sold off to investors or any buyer who can close the deal by June 30, said a real estate services firm.
Peppertree Commons, which has 14 retail spaces and 35,000 square feet, is leased by real estate investor Allen Rosenberg, who founded the Alrose Group and Allegria Hotel and Spa in Long Beach.
He took out a mortgage on the lease, whose assets are the retail rent revenue he collects, but he's now delinquent on $2.7 million in balance and interest, said David Schechtman, a partner at Eastern Consolidated, the Manhattan firm handling the bids.
Rosenberg could not be reached for comment at his office or at the hotel.
The lender, Capital One, is selling the mortgage, Schechtman said, and his firm is accepting bids until June 1. The lease ends Dec. 29, 2033, Eastern Consolidated said.
Lenders in most cases take the foreclosure route against borrowers, but in the past two years, the number of sales of delinquent commercial loans have shot up, said Manus Clancy, managing director of Manhattan-based Trepp, which tracks commercial mortgages.
"We are seeing more and more situations where a new entity either buys a distressed loan or takes over the property and assumes the existing mortgage," Clancy said. "Often this existing mortgage has its terms adjusted and some principal forgiven."
He said loan buyers range from retail players to investors of distressed assets.
Schechtman said many investors during the boom years were willing to make mortgages based on leases. "They gambled and expected a stream of revenue, particularly on Long Island," he said.
Just as in the housing market, the lenders and investors believe property prices would only go up and in some commercial loans, they lent more than the revenue coming in from rent.
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