In the latest edition of Crain’s Cleveland Business, our hospitality expert Laurel Keller weighs in on the mid-2015 Kimpton Cleveland Hotel opening and other Cleveland-area developments. Ms. Keller notes that for some, Cleveland is becoming a ‘city of choice.’ With a discriminating brand like Kimpton in agreement, her assessment is well-supported.
By JAY MILLER
The developer of the Schofield Building in the heart of downtown Cleveland has set a mid-2015 opening for the Kimpton Hotel and apartments under construction in the historic building.
While that’s not the firmest of opening announcements, it’s a positive sign for a project that has had a rocky history. It has been a victim of a difficult hotel lending environment that remains cautious after the market collapse and decline in hotel occupancy that followed the Great Recession.
Brian Intihar, vice president of developer CRM Properties Inc., committed to the opening as CRM is firming up the final bits of financing for the $45 million project, which has been under development since before 2009.
Despite financing difficulties, the Kimpton is part of a boom in Cleveland hotel development that has blossomed of late, as the new Cleveland Convention Center was opening and even before the blockbuster announcement that the city would host the Republican presidential nominating convention in summer 2016.
Early next month, the Kimpton developer expects approval of a backup collateral agreement with Cuyahoga County. That will provide key lender Wells Fargo the comfort it needs to move ahead with its $29 million in first and second mortgage loans.
Last Wednesday, Sept. 10, the Cuyahoga County Community Improvement Corp., a quasi-public body of bankers, business executives and county staff that reviews the county’s economic development lending, unanimously recommended to county council that the county pledge $5 million as backup collateral on the second mortgage loan.
The building recently was appraised at $33.5 million, Intihar told the Community Improvement Corp.
“It’s the final piece to completing the capital stack,” Intihar told Crain’s about the county’s collateral pledge. “It’s an additional guarantee that Wells can look to.”
Market heats up
CRM and its principals, including Intihar and president Steve Calabrese, have an $11.4 million equity investment in the project.
Work began after the developer in 2009 received a $1.25 million loan from the city of Cleveland. That loan enabled CRM to look under the aluminum panels added in the late 1960s to assess the state of the original brick and terra cotta exterior, dating from 1902.
The underlying materials needed considerable restoration, but the developer moved ahead with the work as it lined up a financing package. In 2010, the state of Ohio granted the project $5 million state historic preservation tax credits.
The final financing fell into place when CRM reworked the project to include more apartments and fewer hotel rooms, which in a hot apartment rental market like downtown Cleveland improves the cash flow outlook for a lender.
The resurgence of investment in downtown, led by the new convention center and the adjacent Global Center for Health Innovation, has spurred several downtown hotel projects. The remaking of downtown is one key reason why one hotel consultant believes Cleveland should be “a city of choice” as a place to live and to visit.
“Continued development projects, anticipation of the coming RNC and hype surrounding the return of LeBron James to the Cleveland Cavaliers will cast a bright light on the city and the entire metropolitan area, providing a great opportunity for all to see it’s not a city that developers, national conventions, sports superstars and world-renowned doctors merely settle for,” wrote Laurel Keller, director of appraisal and consulting services for Hotel & Leisure Advisors, a Lakewood-based consulting firm. “For some, it’s become a city of choice.”
Among the hotel projects that Keller highlighted in her Aug. 28 post on HotelNewsNow.com were the recently opened, 484-room Westin Cleveland on St. Clair Avenue; the 150-room Aloft in the Flats; and the 156-room Metropolitan at The 9, a Marriott Autograph Collection hotel that opened earlier this month across East Ninth Street from the Kimpton at the former Ameritrust Tower.
She also mentioned the under-construction, 600-room Hilton Cleveland Downtown and the Le Méridien Cleveland, from the Starwood Hotels & Resorts, which is expected to open in January 2016 at 1001-1101 Euclid Ave.
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To read Ms. Keller’s original article published in HotelNewsNow, click here.