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Trophy Property

By GREG BORDONARO

June 10, 2013

A penthouse, sky walk, and rooftop sky deck overlooking Bushnell Park are just a few of the amenities being pitched by local developers aiming to convert downtown Hartford's tired-looking and vacant 101 and 111 Pearl St. office buildings into modern apartments that lure young people to the city.

Final plans for the $42 million project were recently submitted for review to the Capital Regional Development Authority and aim to redefine a key piece of real estate in downtown's central business district at the intersections of Pearl and Trumbull streets.

The goal, developers say, is to create a trophy property by physically and aesthetically linking the two office buildings and converting them into a 201-unit apartment complex with window glass façade and metallic stained brick.

A sky deck atop the 12-story, 101 Pearl St. building would give residents private views of Bushnell Park, developers say.

The ambitious plan is being pitched by a development group that includes Hartford stalwarts Martin Kenny, Sanford Cloud Jr., and Alan Lazowski in partnership with Philadelphia multifamily housing developer Pennrose LLC.

It represents one of the dozen apartment projects now being considered for downtown Hartford, as city and state leaders look to add 1,000 residential units to the central business district over the next few years.

But it also may be one the most complex deals.

As part of their proposal, the developers plan to take full ownership of the Trumbull on the Park apartment complex and adjoining garage. All four of the properties, however, are owned by different government entities and it will require major political wrangling to get a deal done.

Financing the project will also be tricky. The developers are asking the Capital Region Development Authority for $14 million, which will make or break the deal. They will also need to refinance a nonperforming loan on Trumbull on the Park.

“It is a complicated deal,” said Kenny, who owns a stake in the Trumbull on the Park apartment complex. “But this project has been the missing link to that section of downtown. To have a vibrant corner there is going to make the whole thing sing.”

Kenny said demand for apartments among younger demographics is spurring the development, which is why it will include smaller, more compact studio and one-bedroom living spaces. They won't be the micro apartments that have become popular in larger cities like New York and Boston, but they will range in size from 450-to-700 square feet.

There will be a few two-bedroom apartments and a penthouse atop 111 Pearl St. About 18,780 square feet of retail space will also be available.

In terms of design, Kenny said the existing metal and glass façade on 101 Pearl St. is failing and will be replaced by a unique glass window system. For 111 Pearl St., plans call for removing a small portion of brick on all levels at the northwest corner of the building and replacing it with a new vertical glass tower element.

While the vision is ambitious, a lot needs to happen before it becomes a reality. Many developers have pitched plans in the past to re-develop the properties but none have come to fruition.

One of the key issues, Kenny said, will be negotiating with the various property owners.

The city of Hartford, Connecticut Housing Finance Authority (CHFA), and Kenny each own a stake in one or more of the properties that would need to be sold to the development group to make the project work. The trickiest building may be Trumbull on the Park. CHFA owns 90 to 95 percent of the 100-unit apartment complex, while Kenny owns the remaining portion.

There is also a loan on the property that has run into trouble.

Despite being almost fully occupied, Trumbull on the Park ran an operating deficit last year, which forced CHFA to kick in just over a half-million dollars in funding to help the building make ends meet.

Kenny said the building's high debt costs are eating into revenue. It was built in 2005 for $38.5 million and leveraged with about $23 million in debt. Owners have been paying a 6.5 percent interest rate on the loan and are trying to refinance it to a 3.4 percent rate to regain positive cash flow, Kenny said.

They also want to transfer full ownership of the property to the new development group.

The developers will also be looking for $14 million from CRDA, which is the regional development agency overseeing residential housing in Hartford. CRDA has $60 million to provide for residential projects and has already allocated a portion of those funds.

Without help from CRDA, the apartment project is not likely viable, Kenny cautioned.