RESolutions Brokers Sale of Cleveland’s Rose Building for $37.9 Million

FOR IMMEDIATE RELEASE:
Tuesday, September 27, 2017

Rose Building

Medical Mutual Headquarters, Cleveland, Ohio

(Chicago, IL) – Last week, as advisor to a special servicer, Torchlight Investors, on a defaulted CMBS loan, S.L. van der Zanden, Managing Principal of RESolutions, arranged the sale of the 381,000 square foot historic Rose Building to its current tenant, Medical Mutual of Ohio for $37.9 million. The sale is being viewed as a successful conclusion to a process that began over a year ago. That was when the lender, a group of bondholders represented by U.S. Bank, filed for foreclosure against Bentley Forbes, a California-based landlord, and a court-appointed receiver was installed.

The Rose Building, which was briefly the tallest building between New York City and Chicago, has been home to Medical Mutual since 1947 and they owned the 10-story building and its six-story annex from 1984 to 2000. Seventeen years ago, Medical Mutual sold the complex, along with other buildings, to Bentley Forbes to free up cash. Due to the near-term lease expiration of the building’s sole tenant, they were unable to refinance. Thus resulting in a maturity default.

S.L. van der Zanden’s Role

S.L. van der Zanden’s initial role was to negotiate a “blend and extend” of the absolute triple net lease with Medical Mutual. To extend the term with less than four years remaining to at least 11 years.

“My assignment was to put the property on a secure financial footing conducive for a buyer to obtain long-term financing and thereby facilitate a property sale at an attractive cap rate,” he says. “We were surprised that Medical Mutual’s response to our initial proposal was an offer to purchase with a net economic value of slightly less than thirty million dollars.”

Over the course of nearly a year, and despite many stops and starts, a deal was finally struck. In June of 2017, the deal closed at the final purchase price. The sale price was about $10 million less than what BentleyForbes paid in 2000. But it’s still a notably high number for an older downtown building. This is based on the prices that other, comparable properties have been fetching. Cuyahoga County estimates that the property is worth $16.2 million.

“We were excited to work on this assignment since we specialize in improving operations and leasing of large commercial properties. We have repeatedly demonstrated that we can add significant value while guiding distressed assets through the foreclosure process,” said S.L. van der Zanden, Managing Principal and CEO of RESolutions.