CLEVELAND, Ohio — A lender is seeking to foreclose on a hotel near Cleveland Hopkins International Airport, saying its owner defaulted on a mortgage.
Ceres Enterprises, which owns the 168-room Hilton Garden Inn along I-480, just north of the airport, took out the $14.5 million loan with Citigroup Global Markets Realty Corp. in 2014.
The hotel’s owner missed payments and as a result U.S. Bank, which now oversees the loan, has demanded payment of the balance, according to a lawsuit filed last week in Cuyahoga County Common Pleas Court.
The lender claims that the Hilton’s owner, a Westlake-based developer, owes $13.2 million, and that the amount continues to increase with interest, late charges and other fees.
In addition to the foreclosure request, the lawsuit asks a judge to appoint a receiver to oversee the its operations. The lender suggested Florida-based hotel executive Tom Moore fill that role.
Ceres President David Crisafi declined comment and referred a reporter to his lawyer, Michael VanNiel. The attorney did not respond to a voicemail. Tami Hart Kirby, who filed the lawsuit on behalf of U.S. Bank, did not return a phone call.
The lender’s lawsuit comes as travel has picked up and the number of coronavirus cases has fallen. In 2020, stay-at-home orders and health recommendations severely curtailed travel. The hospitality industry felt the brunt of this, with occupancy rates plummeting.
As more people get their vaccines, some hotel owners are optimistic that falling case rates will lead to more travel and room rentals, but analysts have projected that it may be a few years before the industry fully recovers. The American Hotel & Lodging Association said in January that it did not expect business travel to return to the levels seen in 2019 until at least 2023 or 2024.
It appears from tax and court records that Ceres – which also owns hotels in Avon and near Dayton, and in Indiana and Minnesota – may have had similar issues last year.
Cuyahoga County in May 2020 filed a lien on the hotel for more than $36,000 in unpaid taxes. The county released the lien in March, with a prosecutor writing in a motion that “the matter has been settled and the judgment has been satisfied.”
County records also show that Columbus-based contractor MKS Hotel Development filed a $334,000 mechanic’s lien in June 2020, which said the hotel owner didn’t pay for the contractor’s work.
Ceres also filed suit in July against Travelers Insurance Co., seeking money for claims filed for lost business expenses as a result the pandemic. In the lawsuit, first filed in Common Pleas Court but later moved to federal court in Cleveland, Ceres filed an insurance claim after guests canceled their hotel reservations because of health orders enacted by the county and state to prevent the spread of the virus. Travelers denied the claim in May 2020, according to the suit.
U.S. District Judge J. Philip Calabrese in February dismissed the lawsuit, interpreting Ceres’ insurance policy as not requiring Travelers to pay out the claim.
“In this ruling, the Court does not intend in any way to dismiss or minimize the pain or difficulties those in the hospitality business have endured since the outbreak of the pandemic,” the judge wrote. “But the question before the Court is a narrow one, limited to interpretation of language in Plaintiff’s insurance policy.”
The hotel owner has appealed.
Read more:
Hotel occupancy in Cleveland plunges to 37% in 2020, and the worst may be yet to come
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