Bank sells off loan on foreclosed Bowl 58 property
A private real estate development company has acquired the $7.5 million loan owed to a bank by the owners of the dormant and half-built Bowl 58 bowling center in Riverhead, the News-Review has learned.
The move could potentially help restart the project, on which no work has been done for more than a year.
The developers of the bowling center, which had been highly anticipated by residents, got much of the work completed before Bank of Smithtown foreclosed in 2010. Several contractors who worked on the project also sued, claiming they were owed money for their work.
Bowl 58’s owners, Joseph Albanese and Robert Bunt, borrowed $7.5 million for land and construction costs but subsequently had a falling out in which Mr. Bunt, a Manhattan real estate developer, pinned the blame for the project’s financial troubles on Mr. Albanese.
Mr. Albanese had run bowling centers but never built one.
Mr. Bunt told the News-Review last year, “Joe is the reason it’s not open. Nobody wants to work with him. He has no money. I have plenty of money. I could finish that project in 90 days if Joe would just let me buy him out, but he won’t.”
This week, Mr. Bunt said he is still trying to buy out Mr. Albanese, who still refuses to sell.
Neither of the men were aware the bank had sold the loan until contacted by a reporter Friday.
Mr. Albanese said he had come close to selling his interest in the project to Mr. Bunt at one point, but the deal fell apart.
Mr. Bunt said he and Mr. Albanese are each 50 percent owners of Route 58 LLC, the entity that owns the property. The court last year appointed a receiver to manage the property, meaning the owners are prohibited from being on the site or doing any further work. The court at some point could order the property to be sold at auction, but that has yet to happen.
On April 13 of this year, the $7.5 million loan owed to Bank of Smithtown, now known as People’s United Bank, was sold to Main Road Holdings LLC of Medford, a company headed by Jeffrey Rimland.
Mr. Rimland’s family owned the Rimland department store in Riverhead for many years on the site of what is now the Suffolk County Community College Culinary Institute. His company has also overseen more recent development projects in Riverhead and Southold towns.
A person answering the phone at Rimland Equities said the company would have no comment on the Bowl 58 situation.
The practice of buying loans from banks is said to be a profitable business, in which a private entity will usually buy a loan from a bank at a price less than the amount owed on the loan. The bank then gets something out of the deal and no longer is involved in owning the real estate, and the company that bought the loan can either sell the land or collect the repayment of the loan for more than they paid for it, but less than what was originally owed.
Also, the people who owed the money can end up paying less than what they owed.
“It’s a win-win situation,” said one real estate developer who asked not to be named, adding that buying loans is often more profitable than buying real estate. He said such arrangements also can speed up the process of developing foreclosed properties such as Bowl 58.
Riverhead Town Assessor Mason Haas said he toured the inside of the dormant bowling project with Mr. Rimland about two weeks ago.
“The alleys are installed and it looks good,” he said, adding that the alleys didn’t appear to have warped, as had been rumored.
He said the kitchen equipment and bathroom fixtures are on site but not installed, but the bowling alley machine that was installed is used, rather than new, and at the time was leaking oil.
The Riverhead Industrial Development Agency voted in January 2010 to give Bowl 58 a seven-year property tax break that called for a 50 percent abatement in each of the first three years, with the applicant paying 55 percent in year four, 60 percent in year five, 65 percent in year six, 70 percent in year seven, and then paying full taxes after that.
But Mr. Haas said Bowl 58’s owners never filled out the necessary paperwork with the assessor’s office, and as a result, does not receive the tax breaks.
