Real Estate Receivership Case Study

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Case:
Yidi v. JHB Hotel, LLC et. al.
Cleveland, Ohio
Real Estate
2017

Challenge:

A row of vacant buildings on Euclid Avenue in downtown Cleveland had been sold three times before going into receivership after the former owner defaulted on paying the loan. All three purchasers were unable to develop the building due to lack of financing, leaving the buildings to sit idly for more than 10 years. There were previous plans in place in 2011 to put up a La Meridian hotel in the 1000 block, however those plans, led by Steve Goodman, a California businessman, did not materialize.

The complex that spans three addresses and stretches from 1001-1101 has faced troubled ownership over the years, some of which can be attributed to the Great Recession. Squatters set the 93-year-old building on fire and the neighbors raised a complaint about the dilapidated state of the buildings that sit across from the recently opened Geiger’s clothing store and Heinen’s grocery.

Methodology:

Mark Dottore, upon appointment by the court as the Cleveland property receiver, took control of this real estate with a goal of ensuring that the value of the building was preserved during litigation. Mark vetted potential buyers to ensure that they had the proper funding for the $79 million project. He was able to bring in a developer new to the Cleveland area, who loved the city so much that he subsequently bought 3 other buildings in town.

The Results:

Mark successfully worked with the state to preserve $11 million in tax credits, $6 million more than is typically awarded and without which the sale of the building would not have been possible. Because of Mark’s work to preserve the tax credits, the building was finally sold to a developer that was able to put $9.1 million in escrow. The new buyer intends on developing the old John Hartness Brown building to include apartments, retail stores, and parking. With the new buyer intent on giving the building a new lease, the complex will become a jewel on Euclid avenue and be a real gem for downtown Cleveland real estate.