🔒After upgrades and new tenants, Ellington Big Y plaza lands $16M refinancing

Two and a half years after acquiring a Big Y-anchored shopping plaza in Ellington, a Manhattan-based investment group has recouped part of its acquisition cost through a $16 million mortgage. The group — led by Reggie D. Kronstadt, principal of Krown Point Capital — bought the nearly 100,000-square-foot, three-building property in 2023 for $27.75 million. Kronstadt said a $16 million loan secured in August from Danbury-based Union Savings Bank allowed investors to cash out gains from improvements and new leases. “Given the value created from the new development and from leasing efforts, we were able to upsize the refinancing amount, which provided for some return of capital,” Kronstadt said. Krown Point led a group of investors that bought the shopping center on nearly 30 acres at 135 West Road. The deal involved two limited liability companies that split ownership 70% to 30%. At the time, the LLCs assumed $11.5 million in mortgage debt owed by the prior owner to TD Bank. The investors added a 7,701-square-foot, three-unit retail building last year. A GoHealth Urgent Care leased one unit, Starbucks another. A Jersey Mike’s sub shop will move into the last space in early 2026, Kronstadt said. The plaza ownership also secured a long-term lease extension with supermarket Big Y through 2036, Kronstadt said, creating more value. He’s also close to signing a lease with a tenant for the last, 7,500-square-foot space available in the original retail building. Union Savings Bank provided a $16 million loan to Kronstadt and his partners in August at 5.71% interest, on a five-year term with interest-only payments during the first year. “We were able to get very competitive terms in recognition of the long-term tenancy of Big Y, coming on the heels of activating the new building,” Kronstadt said. The partners have upgraded the property with new sidewalks, pavement, landscaping and irrigation, and added electric vehicle charging stations. “This is our playbook,” Kronstadt said, “finding centers we can add value to by adding leasing capacity and redeveloping initiatives.” Joe Morrissey, the executive vice president of commercial lending for Union Savings, said banks have been “aggressively” competing for deals this year. Morrissey said Union Savings, which has $3.15 billion in assets, began making commercial loans of this size about 15 years ago and has increased its appetite for large commercial lending over the past dozen years. “We found that segment of the market had more deals happening, and as a financial institution we were looking to increase our holdings within the commercial real estate sector,” Morrissey said. “We really achieved that over the last 10 to 15 years to where we really doubled the commercial real estate assets that we have.” Morrissey said lenders were wary several years ago about how Amazon’s rapid growth might affect retail real estate, but have since been reassured by the sector’s resilience and ability to adapt with new tenant mixes. “As it’s turned out, that particular sector has held up fairly strong,” Morrissey said. “Of course, you’ve seen a transition in the type of tenants within those properties. More medical now, more restaurants and lifestyle-type tenants in a plaza like that. So the mix of tenants has migrated and has been fairly resilient. Retail continues to be an attractive sector to lend to.” Jordan Fogel, a senior vice president and head of commercial real estate at Union Savings, said that during the low-interest-rate period several years ago, lenders relied on loan-to-value ratios as a key measure of deal strength. Now, he said, debt-service coverage and debt yield metrics carry more weight. Grocery-anchored assets, like the Ellington property, allow lenders to offer competitive terms, Fogel said. “When you have a grocery-anchored income center, you can tend to be a bit more aggressive because they tend to attract occupancy, because everyone wants to be in there with a grocery store because of the foot traffic they are getting,” Fogel said.