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8 HARTFORDBUSINESS.COM | JULY 8, 2024 DEAL WATCH M&T Bank taking offers on 'non-performing' $31M loan backed by major Class A New Haven office tower The 418,595-square-foot office building at 555 Long Wharf Drive, in New Haven. PHOTO | COSTAR reported in 2023 that nearly $1.5 trillion in commercial mortgages are coming due in the next three years. Buyer options Fusco Corp. is a well-known real estate development and management firm that is headquartered in the 555 Long Wharf building. The company works on projects ranging from corporate headquarters and college campus renovations to healthcare and sports facilities, both public and private. According to its website, Fusco manages over 5.5 million square feet of Class A office space, retail, medical offices, transportation centers and state and government buildings. Robert Motley High-vacancy downtown Stamford office building sells for $7M; prominent developer eyes luxury hotel conversion By Greg Bordonaro gbordonaro@hartfordbusiness.com A downtown Stamford office building with a high vacancy rate was recently purchased by a high-profile local development firm that plans to convert the prop- erty into a luxury hotel, according to its website. The 101,143-square-foot office building at 300 Main St., sold for a second time in five years in May for $7 million, land records show. The buyer was Stamford-based F. D. Rich Company, a major urban developer that has built a number of multifamily projects in its home city and elsewhere. According to its website, F. D. Rich said it recently acquired the commer- cial property, with an attached 147-space garage, for a "planned adaptive reuse project" that will be "a combination of historic preservation, including of the exterior and grand double height bank lobby, and a full interior (conversion) of office spaces into 149 luxury hotel rooms." "The future hotel will highlight the historic features of this property while providing the most in-de- mand hotel amenities, including (a) proposed rooftop pool," the develop- ment firm said on its website, adding it anticipates the project will be completed in the summer of 2027. F. D. Rich did not return a call from HBJ seeking comment. The eight-story building was being marketed for sale by commercial real estate services firm Newmark as a potential office-to-residential conversion, according to marketing materials, which indicated only 18% of the office space is leased. The seller was Stamford-based real The office building at 300 Main St., Stamford. PHOTO | COSTAR estate investment firm Twenty Lake Holdings, which originally bought the property in 2019 for about $8.3 million, property records show. F. D. Rich has been active in recent years, selling off some key assets and proposing a large-scale 198-unit, 13-story apartment development in Stamford, on Broad Street. In 2021 and 2022, the company sold for $175 million three multi- family properties — Summer House Stamford in Stamford, and Harbour- side SoNo and SONO Pearl, both in Norwalk — containing a combined 422 units. By Hanna Snyder Gambini & Greg Bordonaro hgambini@hartfordbusiness.com C racks in the state's office market are continuing to show signs of widening. Buffalo, New York-based M&T Bank has hired commercial real estate services firm JLL to sell a $31 million non-performing loan backed by a high-profile Class-A office building in downtown New Haven. The office building, at 555 Long Wharf Drive, is not in foreclosure. But a $40 million loan issued in 2010 to the building's landlord, developer Fusco Corp., matured last year and was "non-performing under maturity default," as of Feb. 2, 2024, according to a listing by JLL. The loan, which most recently featured interest-only payments at a rate of 8.5%, has an unpaid balance of nearly $31 million, according to JLL. The loan was originally issued by Bridgeport-based People's United Bank, which was acquired in 2022 by M&T Bank. The 15-floor, 418,595-square-foot office tower, which sits on the water- front, was 43.2% occupied as of May 14, according to JLL. M&T Bank declined to comment on the pending loan sale. JLL and Fusco didn't return calls and/or emails seeking comment. Limiting exposure Banks that carry office assets have been closely monitoring vacancies and leases amid broader office market struggles coming out of the pandemic. Some banks, like M&T and Waterbury regional lender Webster Bank, have chosen to sell off loans backed by office buildings to limit their exposure. Higher interest and vacancy rates and lower property values have made it increasingly difficult for landlords to refinance debt that is reaching maturity. On the flip side, lenders of strug- gling office properties have to decide whether it's best to foreclose and take on building ownership and main- tenance costs, or work out a deal that might require them to take a haircut. Real estate tracker Trepp Inc. In 2021, Fusco proposed a 500-unit apartment development along the New Haven waterfront, but that project has not yet gotten off the ground. Robert Motley, a senior director with real estate firm Cushman & Wakefield, used to be the leasing agent for 555 Long Wharf. He said the building has historically performed well, but the pandemic caused tenants to downsize office space, increasing the building's vacancy rate. With about 234,000 square feet of vacant space, it will likely take years to lease up the building, unless one major tenant comes in to take up a large chunk of space, he said. But finding those large- space occupiers in today's market is difficult, Motley said. The average office tenant in New Haven occupies between 5,000 to 8,000 square feet, Motley said. He said the mortgage will likely sell at a significant discount. A buyer of the mortgage would have several options, including restructuring the loan with Fusco, or potentially pursuing foreclosure, Motley said. Banks would choose to try to sell the mortgage instead of pursuing foreclosure because they don't want to own the property, Motley said.