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Wednesday, March 10, 2021

Downtown Westin on the Brink, Ukrainian Oligarchs' Cleveland Portfolio Could Be Down to One

Posted By on Wed, Mar 10, 2021 at 10:17 AM

click to enlarge Three of the Optima Ventures current and former properties: Crowne Plaza Hotel, AECOM Building, One Cleveland Center - "IMG_2485"BY JEFFPYLE IS LICENSED UNDER CC BY-NC-ND 2.0
  • "IMG_2485"by jeffpyle is licensed under CC BY-NC-ND 2.0
  • Three of the Optima Ventures current and former properties: Crowne Plaza Hotel, AECOM Building, One Cleveland Center

Optima 777, one of an array of LLCs grouped under the Optima companies controlled and financed by Ukrainian billionaires, could lose one of its two remaining properties in Cleveland. 

The Westin Cleveland Downtown hotel, which Optima purchased when it was still a Crowne Plaza in 2011, and which opened in 2014 after a $74 million renovation, could close as early as next week if a judge does not step in to appoint a third party to manage it.



According to a March 8 emergency motion filed by the Cleveland International Fund, the lender who is seeking to foreclose on the hotel property to collect millions in overdue debt payments, Optima is no longer able or willing to put up money for the maintenance of the hotel.

The motion said that Optima is not only behind on its loan repayments, despite multiple extensions, but that the Florida-based company also owes $1.5 million in taxes, more than $850,000 to the City of Cleveland for a redevelopment loan and $300,000 to Marriot International for the use of the Westin name.

Attorneys for Cleveland International Fund argued that allowing the Westin to close, however, would be a catastrophe, especially after the closure in the Spring of 2020 due to the coronavirus. An additional closure would mean that the Westin would lose money from its current bookings and could cause irrevocable damage for the brand in Cleveland.

That's why they've asked the court to appoint Tim Collins, an attorney with Thrasher Dinsmore & Dolan, as a receiver. The motion asserted that Collins was an experienced receiver who has managed commercial and hotel properties in the past and has already familiarized himself with the Westin's case. 

As a court-appointed receiver, Collins would manage the property and potentially put it up for sale. (Collins was in the news recently as one of the Dunham Tavern Museum board members who secretly orchestrated a sale of greenspace to the Cleveland Foundation for its news headquarters.)

The Cleveland International Fund also said that they've found an investor who is willing to contribute $6 million towards hotel operations, but that investment is "wholly contingent" upon the appointment of a receiver.

The Optima companies and its local representative, Chaim Schochet, went on a buying spree in Cleveland shortly after the Great Recession, assembling more downtown square footage in its portfolio than any other entity in town. After recent sales, Optima currently only owns the Westin property, in a joint ownership agreement with a hospitality group in Denver, and the One Cleveland Center skyscraper at the corner of E. 9th and St. Clair.

The One Cleveland Center was raided last summer by FBI agents as part of an ongoing criminal investigation into Optima and the Ukrainian oligarchs who oversee it. They are alleged to have laundered hundreds of millions of dollars in fraudulent loans in Ukraine from 2006 to 2016, using the ill-gotten proceeds to acquire real estate interests and other assets in the United States.

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