Push to sell downtown Westin hotel can resume after Ohio Supreme Court decision

A lender’s stalled push to sell the Westin Cleveland Downtown hotel regained velocity Tuesday, Feb. 15, when the state’s highest court rejected a legal challenge to the sale process.

The Ohio Supreme Court declined to take up an appeal filed by an affiliate of Optima Ventures, the embattled owner of the 484-room downtown Cleveland property. That decision will end a three-month-long stay on litigation in the Cuyahoga County Court of Common Pleas, where a $40.2 million purchase offer from HEI Hotels and Resorts is on the table.

The Cleveland International Fund, a lender based in Cleveland Heights, filed to foreclose on the Westin in October 2020, after Optima defaulted on a $36 million mortgage. The hotel now is controlled by a court-appointed receiver, an outside expert responsible for preserving its value and shepherding it through a sale.

HEI Hospitality Management LLC emerged as the would-be buyer in October 2021 and still is waiting in the wings. The company offered $40.2 million in cash and agreed to assume a pair of government loans on the property, with a combined balance of close to $2.75 million.

But Optima’s attorneys challenged the entire behind-the-scenes bidding process, calling the effort hasty, unfair and flawed. After striking out with Common Pleas Court Judge Cassandra Collier-Williams and an appeals court, Optima asked the Ohio Supreme Court for consideration.

The escalating appeals prompted the local court to put the case on hold on Nov. 15.

The Ohio Supreme Court turned down the appeal as part of a bulk announcement. The justices did not explain why they declined to take up the case.

“We’re encouraged by the action of the Supreme Court,” Steve Strnisha, the Cleveland International Fund’s CEO, said during a brief phone conversation Tuesday morning.

Tim Collins, the receiver responsible for the hotel, declined to comment.

Though Optima’s appeals threw the sale effort and broader foreclosure case into limbo, the filings “absolutely” were not delaying tactics, attorney Steven Miller wrote in an email. He indicated that his client, a company called Optima 777 LLC, isn’t done fighting.

“If at some point there is a court decision to approve a final sale of the hotel, that decision, and the points that Optima 777 has already raised, will then be subject to review by the Court of Appeals and possibly the Ohio Supreme Court as well,” Miller wrote.

At the proposed sale price, Optima stands to collect nothing from the hotel, since any proceeds will go toward paying off property taxes and debt.

The Westin, at St. Clair Avenue and East Sixth Street, is one of two downtown Cleveland buildings that Optima still owns. The Florida-based company became one of the largest players in the central business district after the Great Recession, when property values plunged.

Since then, though, Optima has shed the historic Union Trust Building, at 925 Euclid Ave.; the AECOM office tower, on East Ninth Street; and 55 Public Square, an office building that the K&D Group Inc. is renovating as a hybrid office-and-apartment project.

Optima’s other remaining property is the chisel-shaped One Cleveland Center tower and adjoining garage, at East Ninth and St. Clair.

The company is enmeshed in an international money-laundering probe and legal battles in the United States and overseas. That litigation, which started in 2019, made it difficult for the company to refinance or pay off its debt on the Westin — even before the coronavirus pandemic walloped the hospitality industry.