Push to sell downtown Westin hotel may resume after Ohio Supreme Court ruling

A lender’s stalled push to sell the Westin Cleveland Downtown hotel picked up speed on Tuesday, Feb. 15, when the state’s highest court dismissed a legal challenge to the sale process.

The Ohio Supreme Court declined to hear an appeal filed by a subsidiary of Optima Ventures, the beleaguered owner of the 484-room downtown Cleveland property. The decision will end a three-month litigation in the Cuyahoga County Court of Common Pleas, where a $40.2 million offer to purchase HEI Hotels and Resorts is on the table.

The Cleveland International Fund, a Cleveland Heights-based lender, filed for foreclosure on the Westin in October 2020, after Optima defaulted on a $36 million mortgage. The hotel is now controlled by a court-appointed receiver, an outside expert charged with preserving its value and guiding it through to sale.

HEI Hospitality Management LLC became the potential buyer in October 2021 and is still waiting behind the scenes. The company offered $40.2 million in cash and agreed to assume a pair of government loans on the property, with a combined balance of nearly $2.75 million.

But Optima lawyers have challenged the entire behind-the-scenes bidding process, calling the effort rushed, unfair and flawed. After striking out with Common Pleas Court Judge Cassandra Collier-Williams and an appeals court, Optima asked the Ohio Supreme Court for consideration.

Escalating appeals prompted the local court to suspend the case on November 15.

The Ohio Supreme Court dismissed the appeal as part of a bundled announcement. The judges did not explain why they refused to take up the case.

“We are encouraged by the Supreme Court’s action,” Steve Strnisha, CEO of the Cleveland International Fund, said in a brief telephone conversation Tuesday morning.

Tim Collins, the hotel’s front desk clerk, declined to comment.

Although Optima’s calls threw the sale effort and the larger foreclosure case into limbo, the filings “absolutely” weren’t delaying the tactic, attorney Steven Miller wrote in an email. He said his client, a company called Optima 777 LLC, was not done fighting.

“If at any time there is a court decision to approve a final sale of the hotel, that decision, and the points that Optima 777 has already raised, will then be subject to review by the Court of Appeal. and possibly the Supreme Court of Ohio as well,” Miller wrote.

At the proposed sale price, Optima undertakes not to collect anything from the hotel, since all proceeds will go to the reimbursement of property taxes and debt.

The Westin, at St. Clair Avenue and East Sixth Street, is one of two buildings in downtown Cleveland that Optima still owns. The Florida-based company became one of the biggest players in the central business district after the Great Recession, when property values ​​plummeted.

Since then, however, Optima has abandoned the historic Union Trust Building, at 925 Euclid Ave.; the AECOM office tower, on East Ninth Street; and 55 Public Square, an office building that K&D Group Inc. is renovating as a hybrid office and apartment project.

Optima’s other remaining property is the scissor-shaped One Cleveland Center tower and attached garage, at East Ninth and St. Clair.

The company is embroiled in an international money laundering investigation and legal battles in the United States and abroad. That litigation, which began in 2019, made it difficult for the company to refinance or pay off its debt on the Westin — even before the coronavirus pandemic hit the hospitality industry.

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