Still standing proudly at the corner of East 9th Street and Euclid Avenue in Downtown Cleveland, 925 Euclid’s prominence got taken down a few notches by being put up for auction alongside auto parts stores, fast food joints and other retail properties (NEOtrans). CLICK IMAGES TO ENLARGE THEM.
Whale to be sold off among minnows
When it was built in 1924, 925 Euclid was one of the largest office buildings on the planet and had the largest bank lobby in the world. Now it’s being offered for sale among the likes of auto parts stores, fast food joints and other retail properties whose owners could no longer manage or financially support them.
U.S. District Court Judge Charles E. Fleming appointed John K. Lane of Inglewood Associates LLC as 925 Euclid’s receiver in January as part of a commercial foreclosure action filed by Deutsche Bank.
The bank foreclosed on a $33.4 million loan by 925 Euclid’s owner HH Cleveland Huntington, LP — an affiliate of Cleveland-based Millennia Companies, which was trying to renovate and repurpose the 1.45-million-square-foot building with mixed uses.
Lane, the court-appointed receiver, hired commercial property seller Gordon Brothers Group of Boston to sell the property. Gordon Brothers’ Web site describes it as a retail-focused investment firm whose subsidiaries include Big Lots, Poundland, Barbeques Galore and Wet Seal.
Gordon Brothers’ catalog of current offerings reveals 925 Euclid to be an oddly significant prize among the other properties to be sold. Lane said the reason is a matter of timing.
Ground-floor plan for the Centennial redevelopment of 925 Euclid. The ground floor is at street level with Chester Avenue to the north but below Euclid Avenue to the south (Sandvick).
“Gordon Brothers is a well respected, international auction and other services firm that has been around nearly 125 years,” Lane told NEOtrans in an e-mail.
“Among other things, they specialize in selling distressed real estate of all types, including multiple retail locations for retailers that are shedding stores or closing down,” he added. “This is likely what you are seeing in their auction listing. However, they also have sold numerous large office and other buildings over the years.”
NEOrans sent a message to Gordon Brothers’ President of Real Estate Thomas Pedulla and Senior Managing Director, Real Estate James Avallone via its Loopnet listing but hasn’t heard a response yet prior to publication of this article. This article will be updated with any replies.
Among the responsibilities of managing, operating and preserving the property, Lane was assigned the job of putting the property into the hands of a new, capable owner either by a direct sale or via an auction.
The selection of Gordon generated criticism among some in Cleveland’s real estate community who said they were surprised and disappointed to learn that Gordon Brothers was hired to handle the sale of this significant, historic Downtown Cleveland property.
The first floor is at street level with Euclid Avenue to the south and includes its massive, L-shaped former bank lobby that Millennia Companies planned to repurpose as a transportation museum and a fine restaurant (Sandvick).
“This property needs a specialist in selling historic properties,” said Terry Coyne, executive vice chairman in the Cleveland office of commercial real estate services firm Newmark. He described 925 Euclid as a very complex, important property that would cost $2 billion to replace today.
“Based on their (Gordon’s) Web site, they do not appear to be a specialist in historic assets,” Coyne added. “I can’t imagine why the receiver would hire them. And the borrower and lender have to wonder also. Newmark — Richard Sheehan and I — sold this (property) twice and financed it once.”
“Its redevelopment is important to the seller, lender and the City of Cleveland,” Coyne concluded. “You need to hire someone with experience selling complex, historic properties. Not just someone who has experience with receiverships.”
“I’m officially announcing that I’m getting into the receivership business,” quipped Rico Pietro, a principal at Cushman & Wakefield – CRESCO Real Estate brokerage in Independence. “Whatever this is is not common sense or good business.”
“The fact that a company that sells the Big Lots leases during bankruptcy liquidation is going to be marketing one of the most meaningful corners in all of Cleveland is pathetic,” Pietro added. “There’s three logical sales companies for this property. Hire Terry Coyne, hire CBRE, hire Cresco. The lender probably talked to all of us. But for my comments above, I’m at a loss for words.”
A stacking program for the various floors in the 21-story, 1.45-million-square-foot behemoth to realize the Centennial redevelopment (Sandvick).
Formerly called the Union Trust Building, Union Commerce Building, Huntington Building, or The Centennial, the 21-story street block-filling goliath is renowned for its massive, opulent bank lobby with Corinthian columns and murals. The building is listed on the National Register of Historic Places.
Millennia Companies hoped to renovate and repurpose the former office building in one of two ways. The first was to reactivate the property with 870 workforce apartments, 90,000 square feet of Class A office space, and 20,000 square feet of retail.
The other was as a new Cuyahoga County Consolidated Courthouse plus additional law offices and ground-floor retail. Either program would require an investment of up to half-billion dollars to get the job done. In addition to private financing, Millennia had amassed $70 million in public incentives to aid in 925 Euclid’s renovation.
Public incentives were $40 Million in Ohio Transformational Mixed-Use Development tax credits, a $10 Million in Ohio Brownfield remediation grant, $15 Million in federal HUD loan guarantees backed by the city and tax-increment financing, plus a $5 million Cuyahoga County loan.
Last summer, Millennia CEO, founder and majority owner Frank Sinito stepped away from the day-to-day management of one of the nation’s largest owners and managers of affordable housing properties. The year before, federal agents executed search warrants of Sinto’s Lake County mansion as part of an apparent HUD investigation.
END
