Hartford Business Journal

HARTFORDBUSINESS.COM | JUNE 26, 2023 7 DEAL WATCH and Connecticut Department of Housing, a state brownfields grant, a grant from the town of West Hartford, tax credits and a "seven- figure" deferral of development fees, Brown said. Lexington Partners' most recent projects have included some afford- able units, mostly at the request of the municipalities involved, Kenny said. His transformation of the former Sisters of St. Joseph of Chambery campus in West Hartford into 292 upscale apartments is an example. Town officials gave the "One Park" project a tax deal after Kenny agreed to set aside 10% of the units as affordable. Now, he said he's contemplating diving more directly into projects with higher percentages of afford- able units, which will allow him to tap state financing. Bond financing through CHFA allows a 6% rate locked for 35 years, Kenny said. "We've had some of the highest increases in construction costs in history," Kenny said. "The last two years, the increase is a record- breaker. We had interest rates two years ago on construction loans that were at 3 ½%, and now they are at 8 ¾%." The business model for affordable projects differs from market-rate developments, Kenny noted. Afford- able housing depends on government contributions, and with less cash flow, profits typically come from developer fees. "With market rate, your fee income is not as important," Kenny said, because rents are higher and can be increased more easily. "When a developer does affordable housing, the bulk of the profit is in the devel- opment fee because it's a long-term hold, usually 30 to 40 years. And management fees are based on the income. That's not a high yield." Kenny said Lexington is contem- plating projects that would mix afford- able with market-rate housing. He's focused on towns around Hartford, as well as southeastern Connecticut, which is experiencing a jobs boom being driven by Groton submarine maker Electric Boat. "Clearly, there is a demand, and we think it's a good way for us to grow and diversify the work we are doing beyond just market-rate multifamily," Kenny said. "The governor has prioritized affordable housing and the demand is there." Like Krohn, Kenny is not giving up on market-rate projects. He continues to advance plans for a $100 million redevelopment of the 12-acre former Red Lion Hotel property in Cromwell into 265 apartments, 24 townhomes and 30,000 square feet of retail. He is working on a pipeline of additional market-rate efforts. Reggie D. Kronstadt, principal of Krown Point Capital, has worked with partners to buy or build hundreds of upscale rental units in Connecticut since 2020. In May, Krown Point and Fairfield-based Connecticut Realty Trust broke ground on 90 luxury townhomes in Bloomfield. The partners are currently seeking permits for 163 single-family homes in East Granby. Kronstadt said Krown Point is contemplating affordable projects, given the growing number of funding supports. Even so, affordable builders face competition for the funds and, quite often, opposition from local residents, he said. "It's definitely an interesting prop- erty type and a lot of people are looking at it," Kronstadt said. "We are softly looking. It takes the right project in the right location and the right municipality. We haven't found the right site that works yet, but it's definitely on my radar." Funding wave The two-year budget Gov. Ned Lamont signed earlier this month included $810 million for affordable housing and housing supports, more than double the spending allocated in the previous budget that expires on June 30. Michael Santoro, director of the office of policy, research and housing support at the Connecticut Department of Housing, said it's been decades since policymakers allocated so much money for affordable housing. Santoro said the new funding will allow the department to speed up the project pipeline. However, state lawmakers failed to pass zoning reforms that had been sought by advocates and developers who contend local resistance to affordable housing is at least as big a factor in the current shortage as the need for additional capital. Department of Housing Commis- sioner Seilia Mosquera-Bruno said her department is stepping up outreach to deploy the new resources as effec- tively and efficiently as possible. "We are bringing in more developers," Mosquera-Bruno said. "We are working with companies that are providing homes for manufacturers. We are looking at all different avenues to achieve our goal." Reggie Kronstadt Bear's Smokehouse BBQ buys Windsor Locks industrial facility for expansion By Hanna Snyder Gambini hgambini@hartfordbusiness.com T he owners of Bear's Smoke- house BBQ have purchased a Windsor Locks industrial kitchen facility at 24 King Spring Road, to expand their food prepara- tion and distribution operations amid the growing popularity of barbecue. Cheryl Antoncic and Jamie McDonald purchased the 24,436-square-foot industrial building in June for $1.75 million. The seller was 24 King Spring WL LLC and its principal, John S. Barbe- rino, of East Granby and Boca Raton, Florida, records show. The facility was originally a food preparation site for airlines at nearby Bradley International Airport. It was built in 1981 and sits on nearly 3 acres in the Bradley Airport Development Zone. Most recently, the building was used as an auto-dealer service center, but will return to a commercial kitchen operation for Bear's BBQ to prepare foods and its signature sauces, which will then be distributed to restaurants and grocery stores like Big Y and Stop & Shop throughout the Northeast. Antoncic said she and McDonald had been looking for a bigger production and distribution facility as they have outgrown their current South Windsor facility, at 454 Ellington Road. The Windsor Locks building already has many of the features they'd need like loading docks, restaurant-grade flooring and ceiling finishes and a grease trap, and will require a small amount of renovations to be operational. The company is eyeing a fall 2023 opening for the Windsor Locks facility. Bear's BBQ has four Connecticut restaurants in Hartford, New Haven, Windsor and South Windsor, along with two restaurants in Asheville, North Carolina. The restaurant is the official barbecue of the UConn Huskies, and has stands at UConn sports venues like Rentschler Field, Gampel Pavilion and the Toscano Family Ice Forum, as well as Dunkin' Park, home of the Hartford Yard Goats. Dan Merrigan, who brokered the sale for Merrigan & LeFebvre Realty Inc., said his firm saw a lot of interest in the property from manufac- turing and truck-storage operations, "but you couldn't pick a better use in a better location for a growing Connecticut company." Bear's this year is marking its 10th anniversary. Its original Windsor restaurant has since closed, but the business overall has expanded and now includes food trucks, Antoncic said. The South Windsor restaurant is currently the site of the company's corporate offices and commissary kitchen. Those functions will be moved to Windsor Locks, leaving just the restaurant in South Windsor. The Bradley Development Zone offers incentives such as tax abatements that help businesses like Bear's BBQ make building improvements and set up operations, Merrigan said. Bear's Smokehouse BBQ's downtown Hartford location is one of the company's four Connecticut restaurants. PHOTO | CONTRIBUTED Seilia Mosquera- Bruno

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