Amid struggling office market, downtown Hartford stilt building faces foreclosure
One of Hartford’s main downtown Class A office towers owned by owner Shelbourne Global Solutions is facing foreclosure, reflecting the city’s office market struggles in the wake of the pandemic.
Wells Fargo Bank in June filed a foreclosure suit in Hartford Superior Court against a subsidiary of Shelbourne alleging that the Brooklyn, New York landlord has not made payments since February on a $31 million mortgage for the 420,000 square foot property at 20 Church St., better known as the Stilts Building.
In May, after several missed mortgage payments, Wells Fargo sent a letter to Shelbourne demanding full repayment of the $25.7 million outstanding mortgage debt.
The foreclosure process is still in its early stages and could be resolved pending negotiations between Shelbourne and the mortgagees.
Shelbourne managing member Ben Schlossberg told the Hartford Courant that his team had worked diligently with lenders to try to resolve the issue and that they were confident they could stabilize the building, which has a vacancy rate. estimated at less than 20%.
“Shelbourne remains fully committed to Hartford and all the other projects we are currently working on and involved in,” Schlossberg told Le Courant.
The Stilts Building was the first property Shelbourne purchased in downtown Hartford for $44.4 million. As part of the deal, he took out a $30.8 million mortgage with an interest rate of 4.53% and a maturity date of April 6, 2023. Shelbourne had the biggest impact on the downtown Hartford commercial real estate market for the past eight years.
Since 2013, he has purchased hundreds of millions of dollars in downtown real estate — including large Class A office towers — becoming the most dominant landlord in Downtown.
Its portfolio includes the iconic Stilts Building; the blue-windowed office tower at 100 Pearl St., purchased in 2015 for $36.9 million; and the Metro Center at 350 Church St., purchased in 2015 for $36.9 million.
Hartford’s downtown office market has been impacted by the pandemic, which has forced many employers to reduce their office footprint as they adjust to a hybrid workforce, where employees come into the office a few days a week and work from home on others.
Class A buildings in downtown Hartford had a vacancy rate of 20.1% at the end of the first quarter, according to CBRE. The overall office vacancy rate in downtown Hartford at the end of March was 17.9%.
Besides its dominant office stock, Shelbourne has expanded into other types of properties.
It plans to redevelop part of the former 12.5-acre Fuller Brush manufacturing campus in Hartford at 3580 Main Street into 153 market-priced apartments. That effort gained momentum in July, after the State Bond Commission approved a $5.5 million low-interest loan for the project.
In June 2021, Shelbourne and Waterbury-based Axela partnered to acquire the Red Lion Hotel in downtown Hartford for $22 million, with plans to convert the remaining rooms into apartments at market price.
Finally, Shelbourne is also one of the partners in the ongoing $100 million mixed-use redevelopment of the Pratt Street Corridor in Hartford, which will add hundreds of new or renovated apartments.
More recently, Shelbourne has been trying to find creative ways to bring people back to downtown Hartford. He created a new marketing video to promote the city and offers significant discounts and perks, including lower parking rates and reduced apartment rents, for new office tenants.