Thursday, August 20, 2015

The Westin Downtown Cleveland: Why EB-5?

The newly opened Westin Downtown Cleveland was built via a collaboration between private developers and CiF using capital from EB-5 investors. CiF was pleased to have been a lender to the project since, without EB-5 financing, the project would not have moved forward.

In its previous life, the building on the northeast corner of East 6th Street and St. Clair Avenue operated as a Crowne Plaza hotel. But years of neglect and mismanagement left the building in dire need of rehabilitation; windows and plumbing leaked, air conditioning was not reliable, and some guest rooms were simply locked shut and forgotten about as the cost of repair was deemed too high. Ultimately, the Crowne Plaza closed and it seemed the most likely future for the building was to become another empty tower in Cleveland. To make matters worse, the dilapidated former hotel was in a very visible section of downtown, only a block away from the construction site of the new Cleveland Convention Center.

However, recognizing the strategic value of the building’s location in addition to Cleveland’s improving economic conditions, development company Optima purchased the property and planned to transform the outdated structure into a new Westin hotel. The new hotel, with signature Westin amenities and updated facilities, would deliver world-class service to business travelers, convention goers, and tourists alike.

Despite the opportunity presented by a new hotel located a block away from Cleveland’s new convention center, traditional sources of investment capital were unwilling to commit to the project. The few sources that were available were only willing to lend small amounts of funds, which posed a problem for the capital-intensive project. It seemed that, even with a prime location, a projected need for hotel rooms in the near future, and other variables suggesting the viability of rehabbing the old Crowne Plaza building, the project would not be able to move forward because financing from traditional markets was generally unavailable.

With help from CiF’s EB-5 Investors, the Westin project was able to secure sufficient, cost effective financing using non-traditional EB-5 investment capital. The EB-5 funds allowed the project to be completed and, at present, the hotel is open for business, serving an important part of downtown Cleveland’s hotel room supply, and delivering stellar service to guests.

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