JV Plans $64M Makeover of Cleveland’s Crowne Plaza
- Oct 24, 2011
Optima Ventures and Sage Hospitality partnered to buy downtown Cleveland’s second-largest hotel, The Crowne Plaza Cleveland City Center. The joint venture paid $9 million cash for the 472-room hotel and parking garage, and plans to invest $64.5 million to renovate the property and turn it into a luxurious Westin.
The property was acquired from the defunct Lehman Brothers Holdings Inc. Located at 777 E. St. Clair Ave., the hotel will close in mid-November and reopen in July 2013 as a 481-room, four-star Westin. Upgrades include a complete renovation of all guest rooms, meeting space and public spaces. The new building will also receive a new roof, a new exterior, energy-efficient windows, a restaurant, a business center, a fitness center and maybe even a spa. The investors hope to connect the hotel to the Public Auditorium, using an underground tunnel or overhead walkway.
To finance the $64 million project, the partners hope to secure a $36 million loan from the Cleveland International Fund. CiF capitalizes on the federal EB-5 Immigrant Investor Program to attract foreign investors, especially from China and Brazil. The EB-5 program promises foreign investors a green card if they put money into American projects that create jobs.
To complete the financing package, the developers are working with the city of Cleveland and Cleveland-Cuyahoga Port Authority on a tax increment financing agreement and sale of bonds. City Council members have been reviewing a tax-increment financing deal worth $6.5 million for Sage and Optima. The Cleveland Metropolitan School District will receive more money as the value of the hotel goes up.
Right now, the Crowne Plaza employs about 100 people, most of whom will lose their jobs in November. However, they will be given the first shot at jobs when the Westin opens. The hotel will employ 300 to 350 people. The project will also create hundreds of construction jobs. Marous Brothers Construction of Willoughby will be the project’s general contractor.
Optima and Sage will share ownership of the hotel. They hope to profit from the opening of a new Convention Center, the Cleveland Medical Mart and the new Horseshoe Casino, and expect to see strong occupancy from both business and leisure travelers.