Massachusetts developer Dakota Partners is selling its 63-unit apartment building at 179 Allyn St. in Hartford, saying the surrounding area hasn’t come to life as hoped and rents are not rising as expected.
“That happens to be a location that is not as we were hoping it would be,” said Roberto Arista, a principal with Dakota. “The bet was this was an area that would turn around. It hasn’t really.”
Dakota borrowed $6.5 million from the Capital Region Development Authority in 2013 for a roughly $15 million project that transformed an office building at 179 Allyn St. into 63 apartments with 10,000 square feet of ground-floor retail.
Michael Freimuth, executive director of CRDA, told members of the authority’s Housing and Neighborhood Committee Monday that “the project” at 179 Allen St. is behind on loan payments. Freimuth said the borrower caught up with 2020 obligations recently and is negotiating to satisfy its 2021 debt. Repeated attempts to amend the deal and accommodate a refinancing have failed, Freimuth said.
“The project is delinquent in its payments to us due to the fact they’ve been trying to refinance it for the better part of a year,” Freimuth told his board.
Arista disputed the characterization that Dakota’s property is delinquent. Dakota only must pay interest on the loan, and only if cash flows allow, Arista asserted. Principal is due if the building sells, he said.
“The project has been struggling and we have not had money to pay the interest,” Arista said.
Arista said a broken sprinkler took some units offline for months, bringing apartment occupancy down to 84%. Now, that is back up “in the 90s” following repairs, he said.
“It’s not about that,” Arista said of the occupancy level. “It’s about the rent level. Costs have been increasing and the rent hasn’t kept up.”
The building at 179 Allyn St. is not Dakota’s only venture in downtown Hartford. The Massachusetts developer has been more successful with its Capitol Lofts project, Arista said. That project, next to the city’s Frog Hollow neighborhood, saw Dakota spent $36 million converting the century-old and long-vacant Hartford Office Supply Building into 112 apartments, along with commercial space.
Arista listed 179 Allyn St. with CBRE in mid-August. There will be a call for final offers at the end of September, said John McCormick, executive vice president with the brokerage firm.
McCormick said the property has seen significant interest. Already, CBRE has received more than 50 requests for confidentiality agreements from potential buyers seeking more information. Comparable properties in Hartford and the surrounding towns have been “very sought after,” he said.
The building offers “stunning” views on three sides, with access to amenities that have helped Hartford become a popular choice for renters. Attractions include proximity to Dunkin Donuts Park, Hartford Stage, Bushnell theaters, Bushnell Park and a great variety of restaurants in downtown Hartford, as well as new restaurants and retail flocking to the historic Pratt Street area.Â
McCormick said 179 Allyn St. is “fully leased,” including ground floor retail space. The Russell restaurant occupies one ground-floor retail space, and a sports bar is coming to the second retail space.
The units in the building are all one-bedroom, and will rent for between $1,200 and $1,500 monthly, McCormick said.
McCormick said he is very optimistic that the sports betting lounge being added to the west side of the XL Center will bring a lot of foot traffic past Allyn Street restaurants.
“It’s pretty exciting,” McCormick said.Â
