Real estate records show that the Carnegie Avenue hotel sold for nearly $16.6 million in a deal that closed June 29. The buyer appears to be a joint venture between Starwood Capital Group of Greenwich, Conn., and Schulte Hospitality Group, of Louisville, Ky. Schulte is stepping in to manage the hotel.
The sale comes as Cleveland prepares for the July 2016 Republican National Convention – a mega-event that will fill rooms across the region – and as property owners jostle for positions in a more crowded hotel marketplace. With an ownership shift, the Hilton Garden Inn, which opened in 2001, is likely to see additional investment and renovations. But it's unclear how much change is in the offing.
A Starwood Capital executive didn't respond to a request for comment. Ray Schulte, the Schulte executive who signed off on a ground-lease deal as part of the hotel acquisition, didn't return a phone call. The hotel's general manager, John Gaydos, declined to comment and referred any questions to Schulte.
The hospitality company has partnered with Starwood on a series of real estate deals, according to regulatory filings. On its website, Schulte lists a portfolio of more than 40 properties, including an Embassy Suites near the Columbus airport, a Hilton Garden Inn outside of Cincinnati and a Courtyard hotel in Stow.
"It's good that they're a management company with experience in Ohio that is wanting to get into the downtown market," said David Sangree, president of the Hotel & Leisure Advisors consulting firm in Lakewood. "I would expect that they would need to do some renovations or a (property improvement plan) as part of the purchase, because it has been over 10 years since that hotel was built."
The Hilton Garden Inn, at 1100 Carnegie Ave., last changed hands after a foreclosure auction where a representative for the mortgage holders entered a winning bid of $12.4 million.
The hotel slipped into foreclosure in early 2011, after an ownership group that included developer Harvey Schach defaulted on a $17.8 million loan that had been bundled with other commercial mortgages and used to back bonds sold to investors. LNR Partners, a special servicer representing those bondholders, has been in control of the hotel since October 2011.
Starwood Capital, a closely held investment firm, and Starwood Property Trust, Inc., a commercial mortgage real estate investment trust managed by Starwood Capital, acquired LNR's various businesses in 2013.