Another downtown Hartford landmark office building has fallen into foreclosure.
The renovated office tower at 960 Main St., which was formerly home to the G. Fox & Co. department store, was hit with a foreclosure filing last week. The building's owners have failed to pay off a $25 million mortgage that matured in September.
The loan, which has been securitized and sold to investors, has been in maturity default for months, and now LNR, a Florida-based mortgage servicing company, is pursuing foreclosure, court documents show.
Anthony D. Autorino, whose company Hartford Downtown Revival LLC owns the majority of the property, said his firm has proposed three separate refinancing plans to LNR, but all three deals were rejected.
“We are disappointed that we have made multiple offers to restructure and have not had a counter offer or response from LNR, other than rejection,” Autorino said.
Autorino said he has been frustrated by the process because the 324,000-square foot-office tower has been performing well financially. He said it is 81 percent occupied with a strong mix of long-term tenants including the Social Security Administration, State Department of Insurance, Hartford Public Schools, AT&T, Comcast, and other state agencies.
The building is also cash flow positive and he said the owners never missed a payment on the mortgage.
Autorino said he is still confident the parties will be able to restructure the loan and that Hartford Downtown Revival LLC can maintain control of the property.
“We believe we will be able to work this out with LNR,” Autorino said. “This is just the beginning of the process.”
The office and retail complex at 960 Main St. is a historic landmark in downtown Hartford and was a key part of former Gov. John Rowland's “Six Pillars” plan for redeveloping the central business district.
The building, built in the early 1900s, was formerly home to the G. Fox & Co. department store until it closed in 1993, an event that dealt a major blow to the city's retail scene.
After the closure, the building stood vacant for nearly a decade until the state stepped in and formed a unique private-public partnership with a group of investors led by Autorino to buy the building in 2000.
Autorino's partnership, Hartford Downtown Revival, paid $2.5 million to own 60 percent of the building, while the state paid $1.7 million for space that now houses Capital Community College.
Autorino said Hartford Downtown Revival invested $48 million to completely rehab its portion of the property, while maintaining some of its historic features including its well-known art deco appearance.
The privately owned portion of the building is a mixed-use commercial property, with retail and office space, as well as meeting facilities.
The $25 million mortgage was taken out only on the office space, so the retail section of the property is not involved in the foreclosure, Autorino said. The office portion of the building takes up floors two thru 11.
In terms of the building's finances, Autorino said the partnership originally took out a $32 million mortgage to finance the overhaul and renovation of the property.
In 2006, they refinanced the initial loan, lowering the interest rate and paying off some of the principal, leaving the $25 million mortgage.
As part of that refinancing, the owners also split the building into an office condo and a retail condo, separating the building's mostly occupied office space from its retail space.
As Autorino's company tries to restructure its loan, it faces a difficult task.
Risk-averse lenders are scrutinizing deals much closer and property owners who are facing an impending maturity date on a mortgage could have a difficult time refinancing. That's especially if the building has lost value, putting the mortgage underwater, meaning the value of the loan exceeds the value of the property.
To make matters more complex, many commercial loans have been securitized and sold to investors, a process that makes it much more difficult to renegotiate the mortgage when it comes due. That's because property owners can't negotiate with a bank directly, but instead must deal with a special servicing company.
The 960 Main St. loan was securitized.
It's a similar situation facing one of downtown Hartford's largest commercial landlords Northland Investment Corp. which has already lost one of its downtown Hartford properties to foreclosure, and risks losing two others.
LNR is the entity pursuing foreclosure against Northland as well.