CLEVELAND, Ohio — The receiver overseeing operations at the Westin Cleveland Downtown, which faces foreclosure, asked a judge on Tuesday to approve the sale of the hotel to a Norwalk, Connecticut-based company to clear the current debts.© John Kuntz/cleveland.com The exterior of the Westin hotel in downtown Cleveland photographed May 6, 2021.
HEI Hotels & Resorts has agreed to buy the St. Clair Avenue hotel for $40.2 million, according to a motion and a copy of the agreement the lawyers for receiver Tim Collins filed in Cuyahoga County Common Pleas Court.
The New England hospitality management and investment company has also agreed to continue making payments on a loan made to current owner Optima Ventures by the state of Ohio that will have $2.2 million remaining by the closing date, and a loan from the city of Cleveland that will have $547,000 left, according to court records
The purchase agreement, dated Oct. 20, says the receiver and HEI agreed to close the sale between Dec. 10 and Dec. 31. Collins asked Judge Cassandra Collier-Williams to set a hearing date and ultimately sign off on the sale.
“Receiver believes that the transaction … is fair to all parties with an interest in the Hotel and is commercially reasonable under the circumstances and will maximize return from the Hotel to the Receivership Estate,” the motion states.
The new motion is the latest sign that the Miami-based Optima could lose of the 484-room hotel, purchased for $9 million in 2011 with Denver-based Sage Hospitality Group. Then known as the Crowne Plaza, the owners closed the hotel and carried out a $70 million renovation before reopening it in 2014.
Lender Cleveland International Fund filed for the hotel’s foreclosure in October 2020, saying Optima owes $35 million on the unpaid principal of a mortgage, along with a few million dollars in late fees, taxes and other obligations.
Collier-Williams in March appointed a receiver, after hotel operator Sage said Optima did not have enough money to keep the Westin open for much more than a week. Last month, she approved the receiver’s plan to market and sell the property.
The motion says multiple companies submitted bids to buy the Westin. After the receiver talked with all bidders, “only HEI submitted a Qualified Bid under the Bidding Procedures,” according to the motion. None of the other companies elected to change their bids.
Steven Miller, an attorney for Optima Ventures, said Tuesday that “unfortunately this continues to play out badly, just as we told the court it would.
“This motion says to the court that there was only one bid and only one bidder deemed as qualified,” he continued. “That simply cannot be the result of professionally marketing the hotel to maximize its value.”
Optima has appealed Collier-Williams’ order from last month approving the sale plan. Miller has argued that it is too soon to sell the hotel, against the backdrop of decreased travel because of the pandemic. Waiting may lead to selling the property for more money, he said at a hearing in September.
Collins told the judge during the hearing that brokers he consulted said the hotel was worth between $38 million and $48.5 million.
HEI previously submitted a lower “stalking horse” bid, which acts as a price floor as other parties place their own bids. The company later raised its offer.
Cleveland.com and The Plain Dealer have reached out to the company for comment.
To compound its problems, Optima, once one of downtown Cleveland’s biggest landlords, is under investigation as agents look into whether people involved in the company used it as a vehicle to launder money for Ukrainian oligarchs.
The FBI and IRS have been scrutinizing Optima for years to see, among other things, whether Ukrainian oligarchs Igor Kolomoisky and Gennadiy Boholiubov used it to launder hundreds of millions of dollars through real estate in Cleveland and other U.S. cities. Nobody has been criminally charged, though federal agents in August 2020 raided a subsidiary’s office at One Cleveland Center.
The federal government is seeking forfeiture of several buildings the company owns nationwide. That included 55 Public Square, which the company sold in February.
Source : https://www.msn.com/en-us/money/companies/40-million-deal-proposed-for-sale-of-troubled-westin-cleveland-downtown-currently-facing-foreclosure/ar-AAPZ9ra1080