G. Fox Building in Downtown Hartford Tumbles Into Foreclosure
By Kenneth R. Gosselin
June 04, 2012
The venerable G. Fox & Co. building on Main Street in Hartford – a key cog in downtown redevelopment plans in the last decade — has been forced into foreclosure by the same mortgage serving firm that is seeking to foreclose on two other prominent downtown buildings.
The action against developer Hartford Downtown Revival and its principal owner, Anthony Autorino, may seem unusual since the office space covered by the mortgage is mostly leased — with the state and city of Hartford as the main tenants.
But even buildings with strong tenant rolls have struggled as property values have slid and lenders have tightened the size of what they will lend in relationship to a property’s value.
Hartford Downtown Revival has been unable to refinance a $25 million mortgage on the former department store property, since the previous note matured in September. The firm owns 60 percent of the 960 Main St. building.
The state owns the portion of the building occupied by Capital Community College.
The foreclosure is being sought by LNR, which also is pursuing foreclosure against two downtown office towers owned by Northland Investment Corp.: CityPlace II and Goodwin Square.
About $23 million is still owed on the $25 million mortgage, part of a earlier refinancing in 2006, plus interest and penalties, court documents show. The mortgage was on the office portion of Autorino’s firm’s property and does not include the retail space.
Autorino told me today that the mortgage was sold to investors on the secondary market, part of a larger portfolio of mortgages, making it tougher to work out a deal.
“The building is performing very well,” Autorino told me. “We’ve put an awful lot of equity into it. The problem is, we’re not dealing with a bank or a mortgage lender. If we were, we would have extended the current loan, which is current.”
Autorino told me he remains optimistic that a resolution will be reached, possibly this summer.
In commercial real estate, mortgages are relatively short-term, and owners must find lenders at maturity to refinance, or pay the loan off with a balloon payment. The tough economic climate and weak office leasing has made it difficult to refinance, pushing buildings into foreclosure.
Hartford Downtown Renewal was current on the mortgage until it matured in September. The office space is about 80 percent occupied, and the revenue from those tenants was enough to pay the mortgage at its 6.6 percent interest rate.
Once the mortgage was in default, the interest rate jumped to 11.6 percent, court documents show.
Autorino and the state jointly purchased the property in 2000 for $4.5 million. Autorino’s share of the redevelopment costs was about $45 million, with the state investing about $50 million. The redevelopment was completed two years later.
Autorino is a former United Technologies Corp. engineer and executive who reaped a fortune on the sale of the telecommunications company he founded. He battled the Federal Deposit Insurance Corp. over bank loans for, among other things, real estate development through the 1990s. He was eventually cleared of federal fraud charges involving the loans.
A political insider, Autorino helped craft the “Six Pillars” development plan envisioned by former Gov. John G. Rowland, for Hartford, which included the redevelopment of the G. Fox building. The 11-story building was constructed in 1918, a cornerstone of downtown’s once-thriving department store district. The store closed in 1993.
Reprinted with permission of the Hartford Courant.
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