By Adrian Maties, Associate Editor
Skyline International Development Inc., a Canadian hotel and resort company, was the lone bidder last week for downtown Cleveland’s historic Arcade building. It will buy the landmark property for just under $7.7 million, the minimum bid required at the foreclosure auction. The Arcade is Skyline’s first acquisition in the United States.
Located in downtown Cleveland, between Superior and Euclid avenues, the Arcade was one of the first indoor shopping centers in America. It opened its doors on Memorial Day 1890. The property includes a 293-room Hyatt hotel, restaurants and shops. It consists of two nine-story towers connected by a five-story, glass-and-metal atrium. John M. Eisenmann and George H. Smith designed the Arcade after the Galleria Vittorio Emanuele II in Milan. Its construction was financed by some of Cleveland’s famous businessmen of the late 19th century: John D. Rockefeller, Steven V. Harkness, Louis Severance, Charles Brush and Marcus Hanna.
A $60 million renovation was completed in May of 2001. Foreclosure proceedings were initiated in 2009 by Bank of America, after the property’s owner, Chicago-based Arcade L.L.C., defaulted on a $33.3 million mortgage. Court records show that Arcade L.L.C. owes $14.3 million on that loan, plus interest and fees. Appraised at $11.5 million, the property went up for bid at two-thirds of that.
At the first auction, in september, The Arcade failed to attract a single bid. As the successful bidder, Skyline has 30 days to close the deal. The $7.7 million price means that Bank of America, Cuyahoga County, the city of Cleveland and the other investors will take a loss.
Toronto, Ontario-based Skyline International Development owns more than 2 million square feet of real estate, including high-end hotels in downtown Toronto, including historic properties such as the Le Méridien King Edward hotel. The company has more than 1,500 employees and is contemplating a public offering on the Toronto stock exchange. Skyline’s shareholders are two public companies, Mishorim & ILDC, both traded on the Tel Aviv stock exchange (MSHR, ILDC). Downtown Cleveland could benefit from its investment in the historic property.