S.E.C. Real Estate Observer

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The real estate market is strong in our part of the country. Although my brokerage career is devoted primarily to the retail sector, I have been active in the acquisition mode of area multi- family properties (my least favorite property type to manage, yet I’m buying more of them).

Even though we have had the mayors from two of our largest cities go to prison and our Governor ousted for corruption or scandals, the appreciation in the condo market continues and the residential rental market has stayed strong, even with consistent new residential development. So much for the old saying: “I’m from the government and I’m here to help!!!!”

The City of Hartford is undergoing several significant projects.

1. The Civic Center Mall – owned by Northland Investment Corp. is undergoing a significant overhaul. The Mall is centrally located downtown and will include retail, office, and residential components. The residential tower will be a 36 story swanky building that will be the fourth tallest building and the largest residential tower between NY and Boston. The total cost is estimated at 160 million with 61 million in public funds (since I’m a member of the public doesn’t that make me a partner in the deal?). Sullivan Hayes Companies NE is handling the leasing for the retail component. Northland Investment Corp. has a significant stake in Hartford including City Place II, Trumbull Place, and Metro Center.

2. Sage Allen Building – Residential Conversion to include 78 Loft Apartments, 42 Townhouses with the design to allow up to 168 college students in their senior year to live in a downtown setting.

3. Connecticut Convention Center and the Marriott Hotel are part of a 30 acre riverfront redevelopment known as Adrien’s Landing. The site is located at the intersection of I-84 and I-91 (Connecticut’s two primary intersections). The convention center is under construction with anticipated opening in July of 05. Front Street is the name of the retail and residential component of the project. It is to include 200 apartments 222,000 square feet of retail and 1100 parking spaces. ESPN has committed to a $5 million attraction and the Wadsworth Athenaeum Museum of Art will likely relocate to this project. The original developer Capitol Properties (owned by Richard Cohen married to Paula Zahn) pulled out of the project after being significantly behind schedule with their retail commitments and development plan. The city had put the project back out to bid and received limited response from developers with none having the strength, background or acceptable plan. The project is currently in limbo.

The demand for retail and the strength of this segment of the market is demonstrated by the 6% cap rates for shopping centers. This rate allows little roam for error and is a little too aggressive for most investors.

Believing in the principles of Broker Estate Building, I have been successful in a number of recent acquisitions for my own portfolio. I have recently purchased 3 apartment buildings totaling 92 units. This was part of an estate that went out to competitive bid with yours truly (and partners) getting the two best properties. There is a twelve unit that we have turned around and are now selling in the $625K range. The remaining 80 two-bedroom units are our primary focus and we hope to have these units completed in the near future. These units provide many benefits but the greatest asset has to be their great location. We are 5 months into our turn-around and the project is going very well. We paid approximately $68,000 a unit at a cap rate in the mid 6% range. Not a steal by any means, however the property has significant upside through increased rents and re-tenanting.

I have also recently closed on a thirty-two-unit apartment building that I am working on converting the apartments to condos and creating the plan to build additional units on the remaining land. If successful in acquiring the appropriate approvals to construct the additional units, I will have enhanced the use of the property creating the possibility for the sale of the land without having to sell the original thirty-two units.

I am also taking advantage of the prices people are paying for real estate and continuing my brokerage business. I have listed 26 condos for sale in the $2.3 million range, I am trying to sell two multi-family properties in Enfield CT, and may be selling a retail property to one of the tenants (who happens to be a bank) in the $1.3 million range.

I am actively looking at opportunities in the Northeast, and will consider projects with upside anywhere up to $40 million. So, keep me posted, folks.