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Lake Erie, neighboring marinas and passing boats provide a picture-perfect backdrop to Quay 55 Apartments, but they do not reflect the ugly, behind-the-scenes financial ills that made the property become the latest casualty of debt woes among downtown rentals.
An affiliate of Boston-based Aspen Management Inc. swooped in last Thursday, Sept. 28, to acquire the $20 million mortgage on the 200-suite complex, according to Cuyahoga County land records.
Through Lenox Mortgage XIII LLC, the operator of 15,000 apartment suites nationwide bought the mortgage in a sale of defaulted loans ordered by the U.S. Department of Housing and Urban Development.
The sale followed Capmark Finance of Horsham, Pa., declaring the loan in default and assigning it to HUD, which sells such loans to recoup what it can under the HUD insurance program.
If the Quay 55 Limited Partnership led by Cleveland developer Mark Coffin is unsuccessful in renegotiating the loan terms, the developer who spent nearly 20 years creating the lakefront project may lose it to a foreclosure sale.
Quay 55 has lots of company. Other HUD defaults or foreclosures in downtown Cleveland include, most recently, the Bingham Place Apartments in the Warehouse District, as well as the WT Grant Building in the Gateway District, the 1900 Euclid Building and Walker & Weeks Building in the Campus District and the Statler Arms Apartments in the Theater District.
Dan Wright, the attorney for Quay 55 Limited and Mr. Coffin, said a...