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Updated: April 3, 2020 Deal Watch Today

COVID-19 stalls landlord Griffin’s CT property sale effort

Photo | Griffin Industrial Realty Inc. Griffin Industrial Realty Inc. is planning to sell two of its office buildings in Windsor and Bloomfield. But those plans have been put on hold because of the spread of COVID-19.
By Joe Cooper

Major Connecticut commercial landlord Griffin Industrial Realty Inc. has suspended plans to shed two of its suburban office buildings in Windsor and Bloomfield due to market uncertainty caused by the COVID-19 outbreak, a regulatory filing shows.

As first reported by HBJ, the New York-based landlord-developer last month said it was seeking buyers for its two, three-story office buildings at the 600-acre Griffin Center office park. The buildings at 5 and 7 Waterside Crossing total about 161,000 square feet.

But that was days before Connecticut reported its first positive case of coronavirus, which has since swept across the state and the U.S. As of late Thursday, there are at least 3,824 cases of COVID-19 in Connecticut and 112 fatalities from the respiratory disease.

The public health crisis has since wreaked havoc on the nation’s economy. That’s why Griffin says it’s no longer marketing those properties as part of a larger strategy to focus on managing and leasing industrial/warehouse space, according to documents filed by Griffin with the U.S. Securities and Exchange Commission (SEC) on Tuesday.

Griffin said it plans to resume the process when they see the market stabilizing.

As a result of the pandemic, Griffin said it expects near-term absorption of vacant space will slow and that certain tenants may defer rent or default on their leases or construction activities. Tenant improvement projects may also be delayed and potential property sales could be postponed or canceled, it said.

“It is too early to understand fully the effects this situation will have on social behaviors, business norms and corporate financial performance in the future, but in the near term there is severe pressure on many industries and workers, particularly those related to the service industry,” the company said in the filing.

[Read HBJ’s coronavirus coverage here]

Griffin also said the Hartford area office market, especially in the north submarket where it has office/flex properties, “remains challenging” as the properties require a large level of capital investments to maintain. That differs from its industrial/warehouse portfolio, it said.

After shedding the Bloomfield and Windsor office pair, Griffin said its remaining office/flex portfolio will include 10 single-story properties spanning about 272,000 square feet. That amounts to about 6% of its total property portfolio.

Also Tuesday, Griffin said it still plans to convert to a REIT for federal tax purposes and generate growth opportunities as it continues to expand its industrial/warehouse property portfolio in select markets. It expects to achieve REIT status by Jan. 1, 2021, it said.

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