Downtown Cleveland’s fifth-tallest building, the 62-year-old Erieview Tower, now has the resources for major renovations to begin for converting it from offices to mixed-use (NEOtrans). CLICK IMAGES TO ENLARGE THEM.
Downtown’s 5th-tallest gets new direction
Despite prior declarations by Erieview Tower’s redevelopment team that it was moving forward with its project, an investment bank that was tasked with delivering the financing finally confirmed today its fiscal resources are now in place.
Brown Gibbons Lang & Company (BGL), headquartered in Downtown Cleveland, announced the closing of approximately $217.6 million in financing for the residential and hotel components of the Erieview Tower and Galleria redevelopment, 1301 E. 9th St., downtown.
BGL’s Real Estate team served as the exclusive financial advisor to the project redevelopment team, incorporated as ErieView Development and led by the Kassouf family. As a financial advisory firm, BGL focuses on global middle market opportunities.
The redevelopment will turn the 40-story 1964 landmark at East 9th and St. Clair Avenue into a 210-key W Cleveland hotel, the first W Hotel in Ohio, and 215 W Apartments.
The apartments will be offered exclusively for rent rather than for sale, a first for the W Apartments brand worldwide, BGL said in a press release. The hotel and apartments are scheduled to open in 2027.
Some minor modifications to the Erieview Tower and Galleria’s proposed uses have been mad since this stacking plan was released three years ago (ErieView Development).
“BGL brought both creativity and discipline to a highly complex capital structure, helping us bring together the right financing partners to move this landmark redevelopment forward,” said Elias Kassouf, a principal at ErieView Development, in a written statement.
“Their understanding of historic redevelopment, structured finance, and the Cleveland market was instrumental in helping us reach this important milestone,” he added. In addition to its Cleveland’s headquarters, BGL has offices in Boston, Chicago, Los Angeles and New York.
The amenity program is the most extensive assembled in a single Ohio building, BGL officials said. A resident will be able to park in the enclosed garage on a February evening, and reach the 38th-floor restaurant, without ever stepping outside.
Residents, office tenants and hotel guests will draw on the same food and beverage program throughout the property, including dining delivered to residences and to office floors.
Also planned are a spa, fitness center, 15,000-square-foot ballroom and lobby lounge as part of the Erieview Tower’s programming that is intended to give the mostly vacant skyscraper new life.
Erieview Tower and front-door Galleria have been waiting for an injection of new life for years. It is hoped that this redevelopment effort will be their savior (Google).
“This project has always been about more than one building,” Kassouf continued. “It is about honoring Erieview Tower’s legacy while creating new energy for East Ninth Street and downtown Cleveland for generations to come.”
The financing is complex. Nuveen Green Capital provided $93.4 million in C-PACE financing for the redevelopment, the largest C-PACE transaction closed in Ohio. The proceeds fund energy, water, and building-envelope improvements, including VRF mechanical systems, curtain wall, and elevator modernization.
ERIEBANK, a division of CNB Bank, is providing senior financing of $20 million. Foss & Company invested in the Ohio Historic and Transformational Mixed-Use Development tax credits and provided bridge financing for those tax credits.
Consortium Structured Investments invested in the federal historic tax credits, with Midland States Bank providing federal historic tax credit bridge financing. Cuyahoga County provided a loan supporting the hotel.
The financings also include Ohio Brownfield Remediation Program funds, City of Cleveland tax abatements and tax increment financing, and Cleveland-Cuyahoga County Port Authority incentives.
Although basic in design, the Erieview Tower’s sheer sides gives it a soaring appearance in Downtown Cleveland’s landscape (Google).
BGL worked closely with Kohrman Jackson & Krantz, representing ErieView Development in the transaction. The other parties involved in the project include Berardi + Partners LLC, TurnDev, Turner & Townsend, Novogradac & Company LLP, Beyer Blinder Belle (hotel architect), and Rockwell Group (interior design).
“This was a highly meaningful financing for BGL, not only because of the scale and complexity of the transaction, but because of what it represents for Cleveland,” said Anthony Delfre, BGL Managing Director, who advised Erieview Development on the financing.
“BGL’s founder, the late Mike Gibbons, was a strong advocate for high-quality multifamily housing across the Midwest, and Northeast Ohio is exactly the kind of market where that vision continues to resonate,” Delfre noted.
“Cleveland’s momentum, combined with the strength of the Erieview redevelopment, helped make it an ideal setting for Marriott to introduce Ohio’s first W hotel and the first W Apartments offered for rent anywhere in the world,” he concluded.
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