{"id":1004165772,"date":"2017-02-02T03:44:14","date_gmt":"2017-02-02T11:44:14","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004165772"},"modified":"2022-12-09T01:06:30","modified_gmt":"2022-12-09T09:06:30","slug":"clevelands-key-center-sells-for-268m","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/clevelands-key-center-sells-for-268m\/","title":{"rendered":"Cleveland\u2019s Key Center Sells for $268M"},"content":{"rendered":"

By Gail Kalinoski<\/em><\/p>\n

Cleveland<\/strong>\u2014The 1.3 million-square-foot Key Center, which includes the tallest building in Ohio, has changed hands for $267.5 million, going from ownership by Columbia Property Trust, a national office REIT, to The Millennia Cos., a Cleveland-based multifamily property development and management firm.<\/p>\n

\"Key<\/a>

Key Center<\/p><\/div>\n

The deal included the iconic 57-story Class A office tower, the adjacent 400-key Marriott Hotel, a 10-story historic bank building and a 982-stall parking garage. Constructed in 1991, the tower was 82 percent leased with major tenants like Key Bank and BakerHostetler law firm prior to the sale but is now more than 95 percent occupied. The anchor tenant in the office tower, KeyCorp, extended its occupancy of<\/a> approximately 487,000 square feet in a 2013 deal that extends its lease through June 2030.<\/p>\n

\u201cI am honored to be part of such an iconic asset and one with such a rich history of excellence,\u201d Frank Sinito, principal & CEO of Millennia, said in a prepared statement. \u201cI believe everyone is excited to see this trophy property back in the hands of a local owner.\u201d<\/p>\n

With the sale, Atlanta-based Columbia has exited Cleveland and completed its disposition program. The REIT, which recently sold three Houston assets totaling 1.2 million square feet for $272 million, has completed $1.2 billion of dispositions since January 2016 and $3.3 billion since January 2012. Columbia said it will use the proceeds in its target markets\u2014San Francisco, New York, Atlanta and Washington, D.C., where the REIT now owns and operates 17 office properties containing 8 million square feet.<\/p>\n

Columbia, which had owned the mixed-use property since December 2005, put it up for sale in September 2015.<\/p>\n

\u201cKey Center is the most recognizable icon on the Cleveland skyline, and we were determined to take a patient approach in order to identify the right buyer for this significant asset,\u201d Nelson Mills, Columbia president & CEO, said in a prepared statement. \u201cOur diligence has now been rewarded, allowing us to exit the Cleveland market at a price within our expectations and accelerate our focus on high-barrier markets.\u201d<\/p>\n

\u201cWith $3.3 billion of assets sold in suburban and secondary markets since early 2012 and another $2.6 billion of acquisitions in markets such as New York and San Francisco, we now possess a truly remarkable high-barrier office portfolio,\u201d he said.<\/p>\n

Last month, Columbia sold its Houston portfolio<\/a> to Spear Street Capital for $272 million. The office properties were located at: 5 Houston Center, a 27-story, 581,000-square-foot tower in downtown Houston; Energy Center I, a 332,000-square-foot property along Interstate 10 in the Energy Corridor, and 525 Post Oak Blvd., a 12-story, 274,000-square-foot building in the Galleria submarket.<\/p>\n

Sinito plans on moving his companies, comprised of Millennia Housing Management, Millennia Housing Development, Millennia Housing Capital, Millennia Hospitality Group and American Preservation Builders, to Key Center. He originally looked at Key Center as a prospective tenant when he decided to pursue the acquisition.<\/p>\n

Millennia intends to spend about $24 million in renovations to the office tower lobby, the plaza and hotel, Sinito said. Local firms, including Vocon, K2M Design, Project Management Consultants LLC, and The Albert M. Higley Co., have begun working on design plans, he said.<\/p>\n

Mark Vogel, senior managing director of Berkadia Capital Mortgage, secured the debt for the transaction, according to Millennia. A consortium of banks led by Citibank that includes Bank of America, Deutsche Bank and Apollo Capital provided senior mortgage and mezzanine debt financing.<\/p>\n

\u201cThe institutions involved in this transaction acted extremely aggressively. They provided a substantial portion of the required capital and worked diligently with Sinito\u2019s entire team,\u201d Vogel, the local head of Berkadia\u2019s Cleveland office, said in prepared remarks. \u201cThis was a team effort where local advisors played instrumental roles.\u201d<\/p>\n

Millennia said the lending group offered a loan to facilitate the acquisition, future improvements and immediate costs that were used to take the building\u2019s occupancy to over 95 percent.<\/p>\n

Vogel worked with Sinito and attorney Albert Adams of BakerHostetler to structure the financing.<\/p>\n

Sinito also credited the Benesch law firm and RSM accounting firm with helping Millennia close the deal.<\/p>\n

\u201cIt took a collaborative effort to complete this transaction,\u201d Sinito said. \u201cMy heartfelt thanks go out to everyone involved on both sides of this deal. Columbia\u2019s team worked side by side with me to get this deal done and I thank them for their efforts.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The 1.3 million-square-foot property, which includes the tallest building in Ohio, is back in the hands of a local owner. <\/p>\n","protected":false},"author":1068,"featured_media":1004165776,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1584,21743,21808,21825,21751,21783,13,21752,21742,21747],"tags":[33250,32894,33457,33221,32791,33794],"class_list":["post-1004165772","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cleveland","category-deals","category-featured","category-finance","category-hotel","category-investment","category-midwest","category-mixed-use","category-latest","category-office","tag-bank-of-america","tag-berkadia","tag-citibank","tag-columbia-property-trust-inc","tag-deutsche-bank","tag-millennia-companies"],"acf":[],"yoast_head":"\nCleveland\u2019s Key Center Sells for $268M - 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