The former Union Trust Bank Building at 925 Euclid Ave. had the world’s largest bank lobby when it was built in 1924. The future of this lobby and the massive office building surrounding it is in doubt as the property is on course to a November auction (CPL). CLICK IMAGES TO ENLARGE THEM.
Developer won’t appeal, still seeks redemption
A federal judge today rejected giving more time to the owner of a massive office building at 925 Euclid Ave. in Downtown Cleveland to secure financing that would end a foreclosure proceeding against it. With that rejection, the property is about to enter a court-monitored sale process toward a Nov. 3 auction.
U.S. District Court Judge Charles Fleming opined that Cleveland-based Millennia Companies and its founder Frank Sinito, doing business as HH Cleveland Huntington L.P., were given plenty of opportunities to pay its bills.
Those bills include resolving a default in the financing and property taxes it secured and incurred for the purchase and redevelopment of the 102-year-old, 1.45-million-square-foot former Union Trust Bank Building, later called the Huntington Building.
“The court has provided a 61-day period for defendants (HH Cleveland Huntington) to exercise their right of redemption,” Fleming wrote in his order today. “Furthermore, defendants have had nearly three and one-half years to cure the default as to this property and have failed to do so.”
In a written statement, developer and property owner HH Cleveland Huntington said it respects the judge’s decision and won’t appeal. However, it said it intends to redeem its equity against a foreclosed debt of $40.1 million by paying it off in its entirety to avoid the court-monitored sale process.
The former Union Commerce Bank turned Huntington Building looms large at the northeast corner of Euclid Avenue and East 9th Street in Downtown Cleveland (NEOtrans).
“The project team continues to work diligently to advance the redemption process and intends to return to the court and the receiver by the end of the month with the financing required to complete the redemption,” HH Cleveland Huntington said in its statement.
“We believe redemption remains the most effective path to achieve full repayment for lienholders while preserving the opportunity to restore and redevelop one of Cleveland’s most iconic historic assets,” it continued.
“Rather than allowing the property to move through an auction process, redemption offers a direct path to repayment, project continuity, and long-term value creation for the property, the city, the county, and all parties involved,” the statement added.
A month ago, HH Cleveland Huntington then asked for and won from Fleming an extended deadline to Aug. 30. Last week, it requested a second 30-day extension to the end of September so it could arrange financing for the redemption. The second extension was denied today.
It got one extra day to bring the deadline to the start of the work week yesterday when the court was in session. A brief, 21-minute hearing by phone was held yesterday, court records show.
An affiliate of the Millennia Companies has sought for years to redevelop 925 Euclid into The Centennial, a nearly $500 million mix of uses including apartments, hotel, restaurants and retail (Millennia).
The foreclosure action was brought last year by Deutsche Bank AG, New York Branch, which provided HH Cleveland Huntington a $33 million loan so it could buy the property for $40 million in 2018. But while Deutsche Bank objected to the second 30-day extension, attorneys for Cuyahoga County did not.
Cuyahoga County had added its name to the foreclosure case as HH Cleveland Huntington reportedly defaulted on a $5 million county loan to help redevelop the property. And Millennia’s affiliate had accumulated $1.7 million in unpaid property taxes to the county.
A court-appointed receiver, John Lane, CEO and managing director of Mentor-based Inglewood Associates, is overseeing the property and the sale process.
He engaged Gordon Brothers Group of Boston to handle the auction. Lane said the sale process, as approved by the court, is underway and is approaching its first benchmark — a Sept. 15 deadline to identify a stalking horse bidder.
A stalking horse bidder is the first pre-approved buyer who makes an initial offer on a distressed asset. This bidder establishes the minimum baseline price so other competitors cannot underbid the asset.
Facade of 925 Euclid after its proposed redevelopment as The Centennial (Millennia).
Lane told NEOtrans that at least one stalking horse bidder has stepped forward, although he could not disclose it. He said that HH Cleveland Huntington’s redemption extensions were causing potential bidders to express reluctance in participating.
“Receiver has indicated that continued extensions of the deadline for equity of redemption hinders his ability to secure a stalking horse bidder,” Fleming added. “The court will not countenance any delay that may have the effect of contravening the carefully considered sales and bidding procedures approved by the court.”
On June 30, Fleming set the schedule for a court-monitored sale of 925 Euclid. The deadline for the receipt of qualified bids is Oct. 24. Bidders will be notified Oct. 28 if an auction will be held. An auction, if necessary, will be Nov. 3. Deadline for objections to a sale to be submitted to the court is Nov. 10.
Sources told NEOtrans last month that Millennia is seeking to close on financing to do more than retain ownership of 925 Euclid. It is attempting to procure funding to undertake a nearly $500 million redevelopment of the property per city-approved plans into The Centennial.
Those plans would turn the 1924-built, 21-story office building into roughly 864–870 workforce and market-rate apartments, a boutique hotel, retail and commercial spaces, fine-dining establishments and event spaces.
The former Union Trust Bank Building is known for its massive lobby. But it has other unique spaces including a rooftop waiting room and station for airships. The building was built when blimps and airships were envisioned to be the future of air travel. It last served as Sammy’s Metropolitan Ballroom (contributed).
“We are encouraged by the strength and commitment of the project’s financial partners whose active engagement reflects confidence in the transaction and is helping advance the financing necessary to redeem the property and satisfy all outstanding lienholders in full,” HH Cleveland Huntington said.
“Their continued work underscores the seriousness of the effort underway and the shared belief in The Centennial’s long-term potential. The Centennial is more than a real estate asset. It is a landmark property with the potential to support job creation, activate downtown, generate long-term economic value, and deliver lasting benefits for Cleveland, the region, and its residents,” the developer’s statement concluded.
The judge’s decision today doesn’t dictate that Millennia and Sinito will lose control of the property. Deutsche Bank encouraged them to bid for the property at auction. And Lane said he has encouraged Millennia and Sinito to be a stalking horse bidder.
“While Frank Sinito’s right of redemption deadline has passed, all is not lost for Frank,” Lane said. “He has the opportunity to be a stalking horse bidder. I would more than welcome that. While I can’t speak to Frank’s intentions and desires, I don’t get the impression he would low-ball that (stalking horse bid).”
And while Lane could not identify any interested buyers by name, citing at least 13 non-disclosure agreements from different parties, he said they have come all over — Northern Ohio, East Coast, West Coast and international. “We’re now full steam ahead on the sale process,” he said.
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