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January 27, 2025

Judge orders receiver to take control of major downtown Hartford office building; city’s largest landlord to ‘reevaluate’ priorities

COSTAR The 12-story Metro Center office building at 350 Church St., in downtown Hartford.
By Michael Puffer

A Hartford Superior Court judge has ordered a receiver to take control of the 293,639-square-foot Metro Center office tower in downtown Hartford amid an ongoing foreclosure action.

Last July, Webster Bank filed a foreclosure suit against a limited liability company controlled by Shelbourne Global Solutions, downtown Hartford’s largest landlord. It alleged Shelbourne had failed to repay a $38 million loan that was issued in 2019 and reached maturity on March 1, 2024.

The loan was originally provided by New York-based Sterling National Bank, which has since merged with Webster.

Superior Court Judge Matthew Dallas Gordon, last week, sided with Webster’s request for the appointment of a receiver to take charge of rents and management of the 12-story office building at 350 Church St. Gordon agreed to the appointment of David Fagone, who recently stepped down from the leadership of Hartford-based property management and brokerage firm RM Bradley.

Shelbourne paid $49 million for Metro Center in 2017. In his ruling, Gordon notes $34 million remains due on the mortgage and the building’s value has fallen to $18 million.

Shedding ‘non-core’ assets

Shelbourne has invested significantly in downtown Hartford, where office real estate values, like many across the nation, have been battered by a post-pandemic shift to remote work. Many larger employers have dramatically shrunk office footprints as leases have come up for renewal.

Last August, a receiver was appointed to control the 23-story “Stilts Building” in downtown Hartford amid a foreclosure action brought by Wells Fargo. The bank alleged an affiliate of Shelbourne missed multiple payments on a $30.75 million mortgage.

Michael Seidenfeld, Shelbourne’s chief operating officer, in an email, acknowledged the ongoing turmoil in the office market.

“The current challenges and difficulties in the commercial real estate market nationwide, and the lack of leasing activity in downtown Hartford in particular, have affected some of Shelbourne’s assets in the capital city and is compelling the company to reevaluate its focus and priorities in this market,” Seidenfeld said.

Shelbourne is shedding some of its “non-core” assets, Seidenfeld said. The company is trying to sell a 43,000-square-foot, Class B office building at 350 Main St., which it purchased in 2019 for $3.1 million with an eye toward converting it into apartments. 

The property has been listed with Goman + York and is on the Ten-X online auction platform.

Seidenfeld said the receivership of the Metro Center is standard procedure for owners unable to refinance. He noted that a half-dozen downtown Hartford office buildings are currently in receivership.

For example, the debt holders of Hartford’s tallest skyscraper recently filed a court request for the appointment of a receiver for CityPlace I.

“A confluence of factors has created the conditions for this: the absence of any meaningful leasing activity in Hartford’s office market, downtown’s 40% office space vacancy rate, and the total freeze of the capital markets,” Seidenfeld said.

“Unfortunately, some banks and lenders continue to maintain unrealistic expectations and an approach that is out-of-touch with the harsh realities of the current market. Nevertheless, Shelbourne continues to pursue all avenues to retain and revitalize its portfolio.”

Ongoing commitment 

Shelbourne has continued to invest in other sectors of downtown Hartford real estate, even as its office properties have struggled.

A joint venture of Shelbourne and Waterbury-based Axela Group recently took out a $27.2 million mortgage on a former hotel at 50 Morgan St., near downtown Hartford’s Dunkin’ Park, in order to complete its conversion into apartments.

Renovations are scheduled to be completed in May, and leasing activity has been robust, Seidenfeld said. 

Shelbourne is partnered with LAZ Parking CEO Alan Lazowski and Lexington Partners in a roughly $37 million plan to convert a shuttered office building at 15 Lewis St. in downtown Hartford into a boutique hotel of about 90 units. That proposal is moving forward and seeking assistance from the Capital Region Development Authority.

In June 2023, the Brooklyn-based real estate investment company paid $4.75 million to buy a mixed-use office and retail complex on the corner of Trumbull and Pratt streets in downtown Hartford. A portion of that property is slated for conversion into dormitory space for students at the downtown UConn campus. Shelbourne has expressed interest in converting other portions into apartments.

Shelbourne is currently underway with an effort to transform the main building of the former Fuller Brush Co. factory, at 3580 Main St. in Hartford, into 155 apartments. 

That project, slated for completion this summer, has prompted “strong pre-leasing inquiries and interest,” Seidenfeld said. 

“Backed by enthusiastic support from the community, this transformative project will offer residents of that community high-quality housing options,” Seidenfeld wrote. 
 

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