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Fremont Group Buying Metro Center

By GREG BORDONARO

February 25, 2013

A major investor in East Hartford real estate is poised to become the new owner of a signature Class A office building in the Capital City, sources say.

West Hartford realty firm The Fremont Group has won the bidding to acquire the 12-story, 293,639-square-foot Metro Center office building on Church Street in downtown Hartford, sources familiar with the deal have told the Hartford Business Journal.

The office building, which was erected in 1986 on downtown's northern fringe, was lost to foreclosure in 2011 by its previous owner, Northland Investment Corp., and has been operated by special servicer CWCapital since that time.

Terms of the deal were not made available but it is under contract, sources say. The building's seller was said to be looking for bids close to the $23.5 million, or $80 per square foot range.

It's not clear if they were able to fetch that price tag.

Jonathan Keller, who runs The Fremont Group, did not return a call seeking comment.

Brokers involved in the deal including Cushman & Wakefield's Joel Grieco and Rockwood Real Estate Advisors' Thomas Dobrowski declined to comment on the deal.

The sale of Metro Center would end a more than three year run of uncertainty clouding the building's future.

The office tower fell into foreclosure in 2009 after its previous owner Northland Investment Corp. defaulted on a $25 million mortgage. Northland bought Metro Center for $10 million in 1997, a significant discount for a building that was built in 1986 for $57 million. At its peak, the building sold for $84 million in the late 1980s.

Northland's foreclosure case didn't get settled until 2011, when a Hartford judge finally ordered the Massachusetts realty firm to hand over the keys to the property. Northland's mortgage was securitized and owned by a group of bondholders, so special servicing firm CWCapital took control of the property.

Metro Center went on the sales block for a short period immediately following the seizure, but was taken off when its anchor tenant Lincoln Financial Group considered moving to another location. Lincoln, which occupies about 60 percent of the building, had a lease that was due to expire this year and was weighing its office space options in Greater Hartford.

With the uncertainty surrounding its anchor tenant, the building wasn't marketable.

In July, however, Lincoln renewed its lease at Metro Center through 2018, clearing the way for a potential sale. The building was put back up for sale at the end of 2012 with an 83 percent occupancy rate.

At the time, brokers involved in the sale said they received interest from dozens of potential buyers.

The Fremont Group appears to have won the bidding war. The firm is not an unfamiliar player in the Greater Hartford realty market. In 2000, Fremont made a big bet on East Hartford, buying up more than $56 million in commercial real estate formerly owned by Beckenstein Enterprises.

Fremont purchased nearly two dozen properties in East Hartford at the time, including the office and industrial park known as Prestige Park, which included 18 separate properties. Fremont also bought the two large office buildings on East River Drive known as River View Square.

There has been uncertainty about the demand for a Class A tower in downtown Hartford because there have been few recent sales of large office buildings. The downtown office vacancy rate also remains high, hovering around 26 percent.

The only recent significant deal was the sale of the 38-story CityPlace I office tower in 2012 to Commonwealth REIT, which paid $101.5 million, or about $117 a square foot.

But CityPlace I was nearly 100 percent leased at the time of the deal, and had major Fortune 500 tenants — including UnitedHealthcare — locked up in long term deals.

Realty sources have said investors are showing interest in Hartford because prices in nearby cities like Boston and New York are getting overheated.