Former Red Lion Hotel in downtown Hartford sells for $22 million. See what plans the new owners have for the building.

A development partnership has purchased the former Red Lion Hotel in downtown Hartford — its upper floors already converted to apartments — with plans to convert the rest of the 18-story building overlooking Dunkin’ Donuts Park into residential rentals.

Shelbourne Global Solutions LLC of Brooklyn, N.Y. — downtown Hartford’s largest commercial landlord — and Waterbury-based Axela Group bought the building for $22 million late last week.

The partners said Tuesday they plan to invest another $8 million in the conversion, and they do not expect to seek public funding, so much a part of financing for downtown apartment projects in recent years.

The new owners also say they intend to put the project’s troubled past behind them. A previous developer that started on the conversion ran into heavy cost overruns, stalling the project for two years. DW Commercial of New York, the lender, took over the project, completed the conversion of the top nine floors and pursued a foreclosure.

In a tour Tuesday, Yitz Rabinowitz, Axela’s vice president, said the building, now named 50 Morgan, has been under contract since January of 2020. But the closing was delayed because DW Commercial sought a foreclosure, and state courts were closed because of COVID-19.

Rabinowitz said Tuesday the pandemic did make the partners pause, uncertainty surrounding the future of rental demand in Hartford.

“During that period, we were, like, not sure what we wanted to do,” Rabinowitz said. “Do we still want to buy this? But we see Hartford — it’s coming back — hopefully, it will be full strength like it was pre-COVID. It was really good pre-COVID. So we hope that trend will continue.”

Plans call for the addition of 164 apartments on the lower floors, mostly studios, but some one- and two-bedroom units, adding to the 96 on the upper floors, for a total of 260. The upper floors are now 50% leased, Rabinowitz said.

The new units are expected to range in size from 350 square feet for a studio to 975 square feet for a two-bedroom, with corresponding rents from $925 to $1,800, including utilities. The cost of parking is still being determined, Rabinowitz said.

A large hotel banquet space will be converted to a fitness center, yoga studio and movie theater. The reception area will be re-imagined as a coworking space, upscale, like a sky lounge at an airport, “but no planes in the front,” Rabinowitz jokes.

A rooftop lounge, envisioned by the previous developers, Inner Circle US, is not practical because there is not enough space, Rabinowitz said. An outdoor lounge, instead, will be created on a lower level where a swimming pool will be removed.

This is Axela’s first purchase in Hartford, although it has done construction work at State House Square, the state offices on Columbus Boulevard and most recently at Shelbourne’s apartment conversion project now underway on nearby Pratt Street. The principals of Shelbourne and Axela have known each other for years, Rabinowitz said.

Axela is the largest owner of off-campus student housing at UConn in Storrs, and Rabinowitz sees the studios at 50 Morgan becoming attractive to students at colleges in the city.

Rabinowitz said Inner Circle US pursued an ultimately unsuccessful strategy of trying to combine upscale apartments with an economy hotel. The Red Lion closed early last year as the hospitality industry was battered by the pandemic.

The new owners plan to approach conversion differently to keep costs in check — and thus, rents — working with the existing layout, rather than gutting and starting over that led to cost overruns by Inner Circle, Rabinowitz said.

The complete conversion will be pricey, including the $10 million that has already been spent. The new owners have paid $2 million of the $3 million in back taxes. The foreclosure cost the Capital Region Development Authority a $5 million loan, the agency’s first major loss in helping to finance nearly two dozen residential projects in and around downtown since 2012.

From the roof of 50 Morgan, there is a birds-eye view of the neighboring construction of the first phase of the mixed-use North Crossing, the former Downtown North.

“We love the building next door,” Rabinowitz said. “One of the reasons we bought the building is because we heard there was going to be more development. To me, more development is more opportunity. If you’re a stand-alone building, you’re a stand-alone building.

“We want to create community,” Rabinowitz said. “We want to create life. We want more.”

Contact Kenneth R. Gosselin at kgosselin@courant.com.