Iconic ‘Stilts Building’ in downtown Hartford faces foreclosure in fallout from pandemic

In the aftermath of the pandemic, downtown Hartford’s largest commercial landlord is facing foreclosure on one of the city’s most iconic office structures: 20 Church Street, the Stilts Building.

An affiliate of Shelbourne Global Solutions LLC of Brooklyn, New York, hasn’t made a payment on its $31 million loan on the distinctive, 23-story tower since February, according to documents filed by lender Wells Fargo in late June.

The foreclosure, which is in the earliest stages and could still be averted, is an early sign of a shake-out that may come to the city’s downtown office market in the fallout from COVID-19. Companies need less space as employees spend more time working at home.

Uncertainty about the future of office leasing extends well beyond Hartford to markets large and small across the country, experts say.

Ben Schlossberg, managing member at Shelbourne, said Monday that tenants are downsizing office space leases not only at 20 Church but at other marquee towers downtown, as a result of the emerging hybrid workplace era. The “Upward Hartford” innovation space remains a major tenant, but was shut down during the worst of the pandemic.

“Shelbourne has been and continues to work diligently with our lenders and our servicers to find a solution and resolve this issue,” Schlossberg said. “We’re very confident that we will be able to stabilize and strengthen this asset.”

Schlossberg said he expected a resolution on refinancing the loan “relatively soon.”

“Shelbourne remains fully committed to Hartford and all the other various projects that we are currently working on and involved with,” Schlossberg said.

The court documents show the remaining balance on the 20 Church loan, dating back to 2013, is about $26 million. The loan matures in April, 2023, the documents show.

Schlossberg said Shelbourne had flagged troubles at 20 Church for its lenders months ago, but the loan had to enter the foreclosure process.

Schlossberg estimated the vacancy of the 420,000 square foot tower, at the corner of Church and Main, with its 2-story lobby, to be under 20%. Shelbourne is aggressively moving to lease, with one tenant — new to downtown — signed Monday and advanced talks under way with two others. He declined to identify the tenants Monday.

20 Church was Shelbourne’s first acquisition in downtown Hartford in 2014. Since then, the real estate investment company has acquired nearly all of the north side of historic Pratt Street, 100 Pearl St. and partnered on a purchase of One Financial Center, the “Gold Building.”

Shelbourne also has emerged as a major developer in Hartford as part of a partnership redeveloping former office space on the upper floors on Pratt into apartments and is now pursuing converting part of the Fuller Brush factory into rentals in the North End.

Both those projects involve millions of dollars in state taxpayer-backed loans from the Capital Region Development Authority that have been committed to them. Less than two weeks ago, the State Bond Commission approved $5.5 million for the factory project.

Both Schlossberg and CRDA said Monday whatever the outcome of efforts to refinance the loan on 20 Church, it is a separate and legally distinct entity that’s in its own “LLC.”

“As such, other Shelbourne related partnerships such as Pratt Street or the future undertaking at Fuller Brush are not directly impacted by what may happen at 20 Church,” Michael W. Freimuth, CRDA’s executive director, said, in an email.

The commercial real estate woes are primarily focused on office and not apartments, Freimuth said.

Schlossberg pointed to strong retail leasing along Pratt Street and robust interest in apartments that will become available this fall.

“I won’t tell you the office leasing in the city is great right now, it’s not,” Schlossberg said. “But we think our building competes well. As the effects of COVID start to wane a bit, the office market is going to come back.”

Kenneth R. Gosselin can be reached at kgosselin@courant.com.