Cleveland-based real estate crowdfunding platform, Vestor, is seeking to help hotel developers to transform three neglected buildings into a LeMeridien hotel in the downtown area.
According to Crain’s Cleveland Business, hotel consultant Lonnie Burghardt was close to ending a five-year quest to turn part of the stretch of Euclid into a 206-room Le Méridien hotel with a 150-seat first-floor restaurant. However a key piece of the plan fell through as the project was cut off from a funding source. Through personal contacts, Burghardt was able to discuss the situation with co-founder and CEO of Vestor, Matthew Moss. From city-demonstrated experience, Moss stated he knew how much difficulty developers have financing good projects.
Burghardt was willing to try Vestor because he had confidence in Moss and his partners. He had researched real estate crowdfunding ventures on the east and west coasts, along with touching base with a few others before the latest financing gap surfaced in May. He said, “I think it’s a very attractive form of financing for real estate. You have the security of real estate, of a building, compared to some other types of businesses. It allows smaller investors to get involved in real estate at lower cost and without having to operate a property.”
As described in the campaign‘s website, situated in the heart of the city’s busy theater district, Le Méridien Cleveland will be adjacent to Playhouse Square, the second largest theater complex in the United States. The hotel will be within walking distance to the newly developed Horseshoe Casino and Cleveland Convention Center. Nearby attractions include the city’s vibrant East 4th Street entertainment district, Progressive Field and Cleveland Browns Stadium. Guests will enjoy easy access to the rest of the city via the HealthLine Bus Rapid Transit (BRT) system and Cleveland’s Regional Transit Authority’s Free E-Line Trolley.
The hotel will have 210 guest rooms and suites, a full-service restaurant, a signature bar, a 3,000 square-foot lounge, and over 12,000 feet of meeting and event space. And as with all Le Méridiens, large-scale artwork will be prominently displayed. The lobby, aka The Hub, will be created as a “social gathering place for creative people to converse, debate, and exchange” and the signature Le Méridien scent will be wafting throughout. Le Méridien will be one of only a few luxury hotels in Cleveland, and one of the only such hotels located downtown.
Moss believes if Vestor can raise the funds for the Le Méridien Hotel, it could be considered the first crowdfunded real estate project in Ohio. If the campaign is unsuccessful, Burghardt adds he will go to more traditional sources of capital to fill the hole in the projects financing plan.
Burghardt and his partners in the project plan to open the hotel by January 2016. Unfortunately, the schedule may have been shifted due to the financing struggles. He also hopes the region will benefit from having Le Méridien in place not only when the republic National Convention hits the city later that year, but also for other events as well.
He said, “You never base a project on a single event like that. It’s in town a week then it’s gone. We’re going forward because of what has already happened in Cleveland with the medical market, casino and aquarium Our analysis shows the market is short of hotel rooms.”
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