By: Kevin Oklobzija//August 3, 2023
By: Kevin Oklobzija//August 3, 2023//
The foreclosure auction on three landmark commercial properties in Rochester’s East End District brought just one bid on Thursday morning: from the lender who initiated the foreclosure.
The Hiram Sibley Building, at the southwest corner of East Avenue and Alexander Street; the Valley Building, at 337-339 East Ave.; and the Fitch Building at the northwest corner of East and Alexander, remain property of California-based lender M360 Community Development Fund LLC.
The buildings, along with several adjacent parking lots, were seized through foreclosure from East/Alexander Holdings LLC and Louis Masaschi.
East/Alexander Holdings and Masaschi defaulted on payments in August of 2020, with a balance of $18.2 million in principal and interest due M360. Including back taxes, legal fees and accruing daily interest of $4,525.24, the balance owing is now likely above $19 million.
Notice of entry of the judgment was filed last month in state Supreme Court in Monroe County, along with scheduling of the foreclosure auction. A total of 10 properties were up for auction on Thursday morning as a package, not as individual lots.
Following initial silence from the dozen or so onlookers when the bidding period opened, M360 Community Development Fund LLC, through attorney John McAndrew of Woods Oviatt Gilman, announced a bid of $8.3 million.
When no other bids were submitted, referee Aaron Sperano closed the auction.
“This is not atypical,” McAndrew said. “The bank will put the portfolio in its holding company and probably market it. They’re valuable properties, historic properties, and they’ll see what they can get when they resell them.”
The lenders did not allow potential bidders to inspect the properties before the auction. Two interested parties said that made it impossible to bid.
“A lot of people want the opportunity to buy through the normal process,” McAndrew said.
Rochester developer Thomas Masaschi was the previous owner of the properties through a series of limited liability companies he managed. But as he began to encounter financial issues regarding real estate borrowing and development, he transferred ownership of the East End properties to his brother, Louis, in August of 2019.
Louis Masaschi was the guarantor of a loan and security agreement between East/Alexander Holdings and M360, dated July 29, 2019. Loan documents, part of the foreclosure filings with the court, show that the $13.2 million loan was to be used for renovation and development of the properties.
East/Alexander Holdings attempted to block foreclosure during a Chapter 11 bankruptcy proceeding. However, Paul R. Warren, judge for the U.S. Bankruptcy Court in the Western District of New York, denied the motion in May of 2022 and, upon appeal, Elizabeth A. Wolford, chief U.S. District Judge for the Western District of New York, upheld Judge Warren’s ruling in October.
Louis Masaschi and his wife, Jeanette Norman, of Longmeadow, Mass., were indicted in May in federal court for their roles in an alleged scheme to defraud commercial lenders.
The Rochester properties were not listed in the federal indictment, although two of the LLCs mentioned (JLL Realty Developers LLC and 79 Enfield Realty, LLC) are among a host of defendants in civil filings by Rochester-based lender U.S. Income Partners.
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