WEST NYACK – A new plaintiff has taken over a foreclosure lawsuit against the Palisades Center after the megamall’s owners were accused of squelching on a $418.5 million debt.
Meanwhile, the mall property remains under receivership, operated by a court-appointed entity. The court has also assigned a referee, who would determine any parameters of a sale of the site.
The mall’s value has diminished over the decades, but it remains a large taxpayer for the town of Clarkstown, school district and county.
Anatomy of a deal from loan to lawsuit
The original loan, $418.5 million, was taken out by the mall’s owners in 2016.
Wilmington Trust in 2023 sued to foreclose on the mall in state Supreme Court in Manhattan, reporting that EklecCo Newco and partners had failed to make payments due on the loan.
This month, BD Palisades Holdings, owner of Black Diamond Capital Management, bought out the loan from Wilmington Trust for a fraction of its original value, according to The Real Deal Real Estate News, garnering heavy losses for investors.
BD Palisades then successfully petitioned state Supreme Court Judge Frances Kahn III to be replaced as the plaintiff in the foreclosure action.
Morningstar Credit reported in September that the mall property’s assessed value had dropped to $191 million. In July 2024, the mall’s market value was listed as $300 million in a property tax settlement case with the town of Clarkstown and other taxing entities.
When the mall first secured the loan in question in 2016, the issuance set the mall’s worth at $881 million, according to Morningstar.
From mall of the future to financial hole
The original debtor, EklecCo, is a subsidiary of the Congel family-owned Syracuse-based Pyramid Cos., which built the 2.2 million-square-foot, four-floor mall in the late 1990s.
The site, off the Thruway and at Rockland’s busy intersection of routes 59 and 303, was promised to be a tax-generating boon for the town, but garnered controversy before the first shovels were in the ground. Clarkstown planning board meetings, usually sleepy procedural affairs, drew crowds of up to 1,000.
The mall’s opening in March 1998 showcased the glamour but also hinted at challenges to come; only a handful of stores were open in time for the splashy launch.
But the mall’s fortunes have been falling for more than a decade.
The property was hit in the late 2010s by the loss of anchor stores like the still-empty JC Penney and Lord & Taylor, and other tenants. In 2020, the shopping mecca was slammed by pandemic-era shutdowns.
What’s next at the Palisades Center mall?
Newer trends in malls nationwide, including the inclusion of “live-work-play” high-end apartments, have been hinted for the Palisades Center.
Those kind of changes would need land-use approvals from the town, which have not been formally sought. While the mall is zoned to allow a hotel, formal moves haven’t been made for that, either.
Just a few miles down Route 59 in Clarkstown, the Nanuet Town Centre (formerly the Shops at Nanuet) plans market-rate apartments behind the former Sears and a stroll to the Nanuet Train station and more residences on the Route side where the Sears Auto store once was.
Meanwhile, the foreclosure case with new plaintiff BD Palisades Holdings continues in state Supreme Court in Manhattan.
The full list of defendants includes: EklecCo Newco LLC, Queen’s Comics Newco LLC, Riesling’s Associates, Three J’s Family Trust, CS Hudson Inc., New York State Department of Taxation and Finance, and John Does 1-100.
In April, the court appointed a referee to calculate the amount due to Wilmington Trust and to figure out if the mall can be sold in parcels. Another court-appointed referee took over in July.
The next court appearance, Nov. 20, was scheduled to discuss the referee’s findings, but according to court documents it has been adjourned.
No further court schedule for the foreclosure was immediately available.
This article originally appeared on Rockland/Westchester Journal News: Palisades Center foreclosure suit gets new plaintiff as loan sold. What’s next for mall?
Reporting by Nancy Cutler, Rockland/Westchester Journal News / Rockland/Westchester Journal News
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