Brown Gibbons Lang & Company has closed financing for the $218 million redevelopment of the 38-story Erieview Tower and Galleria redevelopment in downtown Cleveland. Developer Kassouf Development said the Erieview Tower conversion will have 210 guestrooms as the first W Hotels offering in the state of Ohio.
The development also will include 227 residential apartment units that provide residents with access to concierge, housekeeping, doorman, bellman and butler services as well as to the connected retail Galleria.
The property will have a rooftop bar, restaurant, spa, fitness center, lobby lounge, office spaces and a 15,000-square-foot ballroom.
Huntington National Bank, Midland States Bank, PPG, TurnDev, Cleveland-Cuyahoga County Port Authority, Peachtree PACE and the Ohio Brownfield Remediation Program provided development capital, and BGL's Real Estate Advisors team served as the exclusive financial advisor to Kassouf Development on the project.
Limited Concept
The dual-branded W Residences + W Hotels project, with a combined cost of more than $218 million, is a limited concept that Marriott has with only eight other locations in the United States. The redevelopment will turn the existing Erieview Tower and Galleria—listed on the National Register of Historic Places—into an entertainment destination.
Construction will be phased by component, with residential construction commencing immediately, hotel construction beginning later in 2025, and the project expected to be completed in late 2026. The developers will begin interviewing for a marketing firm to promote both office and retail spaces.
"The BGL team has demonstrated their expertise and creativity in structuring the financing for this phase of the Erieview Tower and Galleria redevelopment project," James Kassouf, CEO of Erieview Developer, said in a statement. " [In] 1908 ... my grandfather rented a news-and-fruit stand at the corner of East 9th Street and St. Clair Avenue, [and] 117 years later, my family is redeveloping the entire block. We have been committed to Cleveland, and we're proud to see that commitment continue with the revitalization of this important historic district."
The Kassouf family purchased Erieview Tower in 2018, and has worked since the acquisition to secure the various capital sources needed for the significant investment required to reposition the asset, including: Round 29, Ohio Historic Preservation Tax Credit Program; Ohio Senate Bill 225, doubling the State Historic Tax Credit; Round 2, the Ohio Transformation Mixed Use Development Credit; commercial real estate tax abatement; residential real estate tax abatement; and a non-school TIF abatement. Another major component of the financial structuring was locking the senior loan via an interest rate swap contract in July 2022, which fixed the pricing of the 10-year treasury for a 10-year loan term.
BGL, along with Kohrman Jackson Krantz, represented the developer in coordination with an extensive team of professionals that included: TurnDev, Berardi + Partners, Inc., Turner & Townsend, Novogradac & Company LLP, BakerHostetler LLP, Polsinelli, Bricker Graydon, Roetzel & Andress, DiPerna & Co., Rockwell Architecture Planning and Design, P.C., Beyer Blinder Belle, and Independence Construction. TurnDev is providing development services and debt financing for the project.
"The Erieview Tower redevelopment project is an important step for Cleveland, and we're proud to have been involved. We look forward to the next phase and to continuing to support efforts that drive our city forward," said Jon Pinney, managing partner at KJK and founding partner of TurnDev and TurnCap.