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September 17, 2020

3 Hartford apartment developments seek loan tweaks due to COVID-19 delays, costs

HBJ Photo | Joe Cooper Spectra Pearl at 101 Pearl St. in downtown Hartford.

For downtown Hartford apartment developers, the COVID-19 pandemic has caused construction delays, cost overruns, sudden vacancies and missed leasing targets.

The Capital Region Development Authority (CRDA) on Thursday afternoon is set to approve loan modifications for three projects to help alleviate those challenges.

The tweaks are modest and none involve any additional capital from the quasi-public agency.

The largest of the three loan modifications is for the developers of 101 Pearl Street (Spectra Pearl) and 111 Pearl Street apartments, adjacent properties that have undergone a $50-million overhaul over the past few years that’s added 258 luxury apartments to the local market.

Both properties have seen slower leasing activity during the pandemic, and 101 Pearl has also seen construction cost overruns, according to CRDA.

Project developer Jeff Ravetz told HBJ back in May that negotiations with several prospective ground-floor commercial tenants were put on ice after COVID-19 hit, and that the lack of feet on the street impacted the April launch of leasing at 111 Pearl.

Photo | Steve Laschever
Spectra Apartments develope Joseph Klaynberg (right) of Wonder Works Construction.

CRDA is now considering granting a forbearance of just over $126,000 worth of interest costs for its $9 million loan for 101 Pearl, which would be added to the principal of CRDA’s note for that property. Also on the table is lowering the interest rates on the mortgage and construction term for both of the properties. In exchange for that, investors in the project have agreed to raise additional private capital to increase their equity by $2.5 million, CRDA said.

When Ravetz spoke to HBJ back in May, only 20 of the 157 units at 101 Pearl had been leased. Things have improved somewhat since then, with occupancy of the building now at 54%, according to CRDA. 

Sudden departures
When COVID-19 reached Connecticut in March, the 26-unit Grand on Ann apartments, located at the corner of Ann Uccello and Allyn streets, saw a sudden and unanticipated decline in occupancy.

The reason, according to CRDA, whose 2013 loan to developer Yisroel Rabinowitz has a remaining balance of about $600,000, is because of a high number of foreign tenants who traveled back home when the virus struck here.

Occupancy at the Grand stands at 49%, down from 88% in Aug. 2019, according to CRDA records.

CRDA’s board will vote Thursday on deferring six months of interest payments, worth about $6,000, on the Grand’s loan.

CRDA’s board will also vote on delaying three month of interest payments, worth about $13,000, for 28 High St., known as the Lewtan Building, which is being converted by developer Constantinos Constantinou into 28 apartments with the help of a $1.9 million CRDA construction loan.

The project was beset by COVID-19-related construction delays, which caused it to miss its original 2020 leasing date target. Leasing there is now expected to begin in October, according to Michael Freimuth, CRDA’s executive director.   

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