$66MM Loan Default for Owner of Wilton Corporate Park Buildings (50 & 64 Danbury Rd.)
Marcus Partners is one of the biggest commercial property owners in Wilton, with its Wilton Corporate Park at 40, 50, 60 and 64 Danbury Rd. as the most notable parcel in the company’s portfolio in town. But that may change with news that the commercial real estate giant has stopped making its payments on mortgage loans on two of the four properties (50 and 64).
GOOD Morning Wilton has learned that the buildings are listed at auction and the loan status is listed as “non-performing,” with the last payment date listed as April 11, 2018. The current balance on the two properties is $66,412,869, which is what remains of the original $71,000,000 loan that was secured through refinancing through Lehman Brothers in June 2007–right before the economic downturn.
What’s underlying Marcus Partners’ financial difficulty is the buildings’ occupancy rate. Only 54.3% of the total 253,434 rentable square feet of Class A office space is occupied as of April. The current tenants include AIG, Coliviti Corporation Nielsen, TD Bank, Louis Dreyfus Financial and ASML, but the buildings recently lost Sun Products and Epsilon as major lease holders.
In the last assessment, the two properties were assessed at a combined worth of $47,377,400–well below the loan amount.
The loans were modified in January 2018, but are now in default, according to the auction listing. Marcus Partners has reportedly had deed-in-lieu of foreclosure discussions.
The problem plaguing the two properties is symbolic of the larger issues facing Fairfield County and Connecticut, with vacancy rates rising and the amount of available office space increasing. According to the commercial real estate broker Avison Young, the Wilton submarket (grouped with Westport, New Canaan, Fairfield, Darien and Norwalk) has 24.3% of its Class A space available as of the first quarter of 2018. According to the Avison Young report, the labor market is shrinking. “Employment was down across most office-using industry sectors with the steepest decline witnessed in the Professional and Business Services sector, which was down 2,700 jobs, marking a new low not seen in this sector’s employment since 2010.”
The news is a concern for town officials.
“Yes, I am aware of the activity surrounding these two properties and have spoken with the appropriate people,” said First Selectwoman Lynne Vanderslice. “Corporate office buildings in Wilton and throughout the area continue to experience double-digit available vacancy rates. Densification, age of buildings and the State’s economy are certainly major factors.”
With growing Wilton’s commercial tax base at the forefront of many recent town discussions, it’s a trend that’s moving in the wrong direction. Vanderslice said the buildings, along with all Wilton properties, will be revalued as part of the Oct 1, 2017 revaluation, and confirmed that the rental and vacancy rates would be expected to be a consideration.
“These buildings are an important component of our commercial tax base. As a community we may need to be open minded to facilitate that continuing. I intend to do what I can as First Selectwoman to see that continue.”
Vanderslice suggests that Wilton may need to encourage alternative development of the properties, as potential residential space.
“Repurposing of excess corporate space is happening all over the area and this may be an opportunity for that to happen with these properties,” she said. “Take a look at the area during a workday. You see people walking or running or crossing the road to grab lunch. It’s developing a nice vibe. The owners have created attractive buildings with lots of very attractive landscaping. That, combined with the number of office workers in the area, the onsite amenities, walking distance to retail, restaurants and soon the NRVT, make it a great candidate for live-work-play should one of the buildings be repurposed into residential.”