🔒What’s the Deal? Hot off the Auction Block

When the time came to sell the foreclosed former AT&T headquarters building on the New Haven waterfront, the principals involved decided to try a different approach: an online auction.

The hope was that this strategy would attract potential buyers from around the country. Built in 1988, the nine-story building at 545 Long Wharf Dr. houses 245,389 square feet of office space on 1.52 acres overlooking New Haven Harbor. AT&T left in 2017, and the building has been only partially occupied since its departure.

James Shevlin, president and COO of CWCapital of Maryland, which owns the online commercial real estate sale platform RealINSIGHT Marketplace, says his company made a decision on how to best dispose of the multimillion-dollar asset.

“We thought [an online auction] would give it a national presence and a lot more exposure, which can produce great outcomes,” Shevlin says. “There was a lot of interest in this property.”

The auction was advertised weeks in advance. Bidding officially started at $4.5 million on Nov. 4 and the auction ended two days later.

The property attracted 15 registered bidders, and seven of them clicked to submit a bid. By the close, 20 bids were received, according to Shevlin, who says the auction attracted buyers from around the country.

Ultimately, the winner was not exactly a stranger. The New Haven-based Knights of Columbus bought the building for $12.8 million, and the sale was finalized in January.

The Knights got a deal on the Class A office building —- the city assessor’s office appraises its current value at $31.26 million.

The property was particularly attractive to the Knights because of its proximity to their iconic tower world headquarters, which overlooks it from a short distance away.

Joe Cullen, a spokesman for the Knights, a Catholic charitable organization which also sells insurance products, says the building will be used to expand the Knights’ office space. They will continue to use all of their current space at their One Columbus Plaza tower headquarters, but this new building will afford the organization room to grow.

The Knights have a long and storied history in the Elm City. A New Haven priest, Father Michael J. McGivney, founded the organization, which was first chartered in 1882 to provide financial assistance to poor, sick and disabled members and their families. Today, it has nearly two million members worldwide and awards millions of dollars in charitable donations each year.

According to Shevlin, the end result was a positive one for both seller and buyer.

“In this case, we were pleased with the outcome,” Shevlin says. “The auction philosophy is to get people excited and engaged. You start the bid where you don’t want to end up, then have increments. We want the market to dictate where the value is. It was surprising how much interest we had here.”

The seller was 545 Long Wharf Drive Holdings LLC, whose principal is Deutsche Bank National Trust Co. of Maryland. Deutsche filed a foreclosure action against former owner New Boston Long Wharf LLC in July 2017 in Superior Court in New Haven. New Boston had secured a $31 million loan and defaulted in June 2017, after originally acquiring the property in 2007 for $40 million, court and New Haven city records show. A judgment of strict foreclosure was entered in August 2018.

From gavel to high-tech bidding

A real estate auction typically conjures up images of empty, dilapidated properties, rather than a prime waterfront Class A office building like this one.

According to Shevlin, the auction model is increasingly being employed for more commercial real estate sales, due to benefits like transparency, competition and efficiency. Prospective bidders are able to review information and materials on the auction site in advance of bidding, he says.

“We have proven you can sell pretty much everything through an auction,” Shevlin says. “Sometimes [sellers] want to get rid of a tax burden. You want a level playing field. With an auction, you see who is interested and registering and can see who is clicking.”

The winning bidder must sign a contract and make a non-refundable deposit within hours of the auction’s close, according to Shevlin, so the chances of a buyer walking away are slim.

The auction route also has the advantage of speeding up the process for the seller, he adds.

“It isn’t always just banks and foreclosures going through auction,” Shevlin says. “It’s a new, efficient and transparent way of selling assets. Sellers are seeing this as a way to get a hard deposit and a contract.”

CW Capital has sold several other office, retail and industrial properties in Connecticut via auction, such as a 48,249-square-foot office building at 599 Research Parkway in Meriden and a Bridgeport Stop & Shop.

When the 545 Long Wharf property went up for auction in the fall, RealInsight Marketplace reported it as being 40-percent leased. Flo-Tech, the Connecticut Conference of Municipalities (CCM) and Ameriprise Financial Services are among the current tenants.

Joe DeLong, CCM’s executive director and CEO, says CCM signed a 10-year lease for space in the building about a year ago. He doesn’t expect anything to change with the new ownership.

“We don’t have any intention of going anywhere, and we are very happy here,” DeLong says. “It is a great view and we are all on one floor. We knew about the [foreclosure] situation when we signed the lease, so the sale did not come as a surprise.”