Hartford Business Journal

16 Hartford Business Journal • January 25, 2016 www.HartfordBusiness.com separate foreclosure actions by debtholders against one set of the building's co-owners, who include Hartford businessman Anthony D. Auto- rino Sr. and former state lawmaker and current Metropolitan District Commission Chairman William A. DiBella. Both personally guaranteed repayment of part of one of their loans. In the three years since foreclosure pro- ceedings on 960 Main commenced, mistrust among a shifting cast of debtholders, co- investors and Autorino-led company affili- ates has led the court to install a receiver to collect rents, oversee maintenance and repairs, among other duties, according to court records and interviews with attorneys and others involved in the case. One of those investors, a Canadian land- lord that Autorino once hailed as an angel to stave 960 Main from foreclosure, is now on the opposite side of the legal table, seeking to seize Autorino's and his co-owners' interests in the property. Autorino accuses the land- lord of breaking its confidentiality oath to side with his opponents. Caught in the middle of all the finger-point- ing are 960 Main's two dozen or so retail and office tenants, including the Hartford school board. The state of Connecticut owns 950 Main St., an adjacent 11-story office building that houses Capital Community College and other state offices that share some entryways and interior concourses with 960 Main. "It's a very complicated building and a very complicated loan structure,'' said Hart- ford attorney Mark Dean, who represents Autorino and an Autorino affiliate that owns the master lease to 960 Main. Autorino, 77, said that when Hartford Downtown Revival in 2000 bought the former G. Fox building and invested $48 million to convert 960 Main, a portion of which houses Capital Community College, into leased and condominium office and retail spaces his "vision was to rehabilitate this wonderful, wonderful building … .'' "We all went into this with eyes open,'' the for- mer United Technologies Corp. executive said. "I want to ensure this building survives for the next 50 years, long after I'm no longer on this earth.'' The legal battle centers, according Auto- rino and his attorney, on attempts by 960 Main's two primary debtholders to wrest con- trol of the master lease away from Autorino's company, HDR Operating Co. LLC. Public files from the dispute trace its ori- gins to a $30 million securitized mortgage that Autorino, DiBella and their Hartford Downtown Revival LLC obtained in Feb. 2004 from Maryland lender CapitalSource. The building, plus all leases and future rents from HDR Operating Co. (HDRO) and claims on the personal property of Hartford Downtown Revival, were assigned at the time to CapitalSource. Autorino and DiBella also pledged their personal guarantees, up to a combined maximum of $3 million, toward settlement of the debt. DiBella, through his Hartford attorney R. Bartley Halloran, confirmed he is personally on the hook to repay $1 million of any unpaid mortgage debt. However, first a foreclosure would have to take place, followed by the court's entry of a deficiency judgment, said Halloran, who added that Autorino is the prin- cipal handler of Hartford Downtown Revival's co-partners' interests in the dispute. "We're a bit player, to put it mildly,'' Hal- loran said. In August 2006, the $30 million mortgage loan was split in two: Deutsche Bank wound up with $25 million, which was secured by the 324,000-square-foot office-space portion of the building that encompasses generally floors two through 11; the rest of the loan, backed by the building's 250,000 square feet of basement, ground and mezzanine floor retail space, total- ing $3.1 million stayed with CapitalSource. Both loans eventually wound up in fore- closure proceedings. In November 2012, CapitalSource moved to foreclose on the retail portion of the prop- erty. Once foreclosure began, CapitalSource in April 2013 assigned its $3.1 million loan from Hartford Downtown Revival, to New York City- based Access Lending LLC. Court records don't indicate what, if any, money changed hands. Access Lending is an affiliate of Maver- ick Real Estate Partners LLC, a Manhattan private equity firm that buys distressed debt liens and court judgments that are secured with commercial real estate, according to Maverick's homepage. Maverick Principal David Aviram declined comment. Meantime, Deutsche Bank sold its $25 million office-space loan to another invest- ment entity, BACM 2006-4 Office 960 LLC, in Jan. 2012. The loan had been repackaged and securitized into a $1.6 billion bundle with other commercial mortgages. In May 2012 the office loan ended up in foreclosure. Then the case got more complicated. In Feb- ruary 2014, Olymbec Corporate Development, of Montreal, Canada, outbid Autorino's HDR Operating Co. to acquire the former Deutsche Bank loan at auction. According to New York commercial loan analyst Trepp LLC, Olymbec paid at least $5.4 million for the loan, which at the time had a $22.7 million unpaid balance. Autorino and an Olymbec official publicly declared that Olymbec, a seasoned real estate investor-landlord with commercial properties in a dozen states, would help save 960 Main from seizure, but that never happened. Instead, Olymbec, rather than salvageing Autorino's 960 Main office and retail stake, teamed with his archrival in the retail fore- closure — Access Lending — to try and wrest legal claim to 960 Main's office and retail por- tions from him. In the process, Olymbec trans- ferred its interest in the office-loan debt to a business entity named 960 Main Retail Inc., of which Access and Olymbec are 50-50 partners. 960 Main Retail Inc. has a security claim on the building's retail spaces. Dean says that, based on his understand- ing from the case record and opposing coun- sel, Olymbec seeks to control the entire build- ing by assuming or eliminating the master lease that Autorino holds. Autorino contends in court papers that Olymbec breached a confidentiality pact when it used proprietary information to pur- sue a joint-venture arrangement with Access. Autorino also claimed in a court filing last August that an attempt by Olymbec and Access to convince the court that one receiver was necessary, rather than two, "is part of 960 Main Retail's and Olymbec's plan to gain total control of the building in a manner that circum- vents and eviscerates HDRO's master lease.'' Furthermore, Autorino claimed in fil- ings that Olymbec has used "lockbox'' funds earmarked to pay the office mortgage to pay expenses on the building's retail portion. Last Aug. 15, the judge overruled his argument. George Lee, of Northeast Retail Leasing & Management in Windsor, was the property's first receiver, later ceding control to Peter Dominski of CBRE-New England. Lee turned over to Dominski $89,686 comprised of $67,945.77 in collected rents and the $21,750.33 balance of flood-claim proceeds from Travel- ers Insurance. According to filings, Lee was entitled to a monthly fee of $3,600, or 6 percent of 960 Main's monthly gross revenue; CBRE sought a $2,500 monthly retainer. On Jan. 19, the court ruled that Domin- ski should tap available cash flow from the building's retail rents to fund all of the retail portion's share of common expenses, such as security, janitorial services, water, gas and electric. If enough money is left, the court ruled, then the receiver should pay the build- ing's second city property-tax installment that turns delinquent on Feb. 1. Meantime, 960 Main's two-track foreclo- sure proceedings continue. However, Dean said, no timetable has been set for a settle- ment, sale or auction of the building's retail and office portions. n For tenants, it's business as usual By Gregory Seay gseay@HartfordBusiness.com 9 60 Main's drawn-out foreclosure saga hasn't negatively impacted its retail and office tenants, some say. Rent is being collected. All maintenance is handled timely. Frequently, Anthony D. Autorino Sr., himself pops in to greet, or to make a purchase. "He was in here yesterday for a bowl of soup,'' said Dareyell Ash, owner of The Foxx Stopp housed on 960 Main's first floor, opposite the atrium concourse link- ing the building to its neighbor, 950 Main, which houses Capital Community College. Ash, of Hartford, opened his "grab and go'' convenience shop 18 months ago after working for a pair of other former retail tenants at 960 Main. "I'm the only spot in the building where you can get a coffee,'' he said. Capital Community students, faculty and staff, as well as staff in the Social Security Administration and Hartford school system housed in the upper, office portion of the building, too, are daily regulars, Ash said. The building's security is good and man- agement has been flexible and responsive when he's needed them, he said. Last week, for instance, Ash said there was a problem with his sink leaking to the ground floor beneath. It was fixed the same day. Down the corridor, framing artist Joe Petrini has been a 960 Main retail tenant occupying 800 square feet on the first floor almost from the time 15 years ago, when the former G. Fox & Co. department store building was renovated and converted to its current use. "The only difference is where I send my [rent] check,'' said the owner of Petri- ni Framing Art, who says he is Autorino's son-in-law. Petrini says he also leases another 200 square feet on the mezzanine level above. n Fight for control of the master lease from page 1 The Foxx Stopp owner Dareyell Ash hasn't seen any disruptions despite his landlord's ongoing foreclosure dispute. H B J P H O T O | G R E G O R Y S E A Y H B J P H O T O S | G R E G O R Y S E A Y 960 Main's lower-level concourse (left). Petrini Framing Art (right) is one of the building's original retail tenants.

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