Warehouse District parking lot
The 260-space parking lot between the Archer, pictured here, and the Bingham apartment buildings in the Warehouse District changed hands this month, in a quiet transaction involving a local seller and out-of-town investors.
(Michelle Jarboe/The Plain Dealer)
CLEVELAND, Ohio - West Coast parking investors have acquired a large surface lot at the western edge of downtown Cleveland's Warehouse District, in a deal that makes near-term development seem unlikely.
On May 11, MVP REIT, Inc., and MVP REIT II, Inc., paid $5.7 million in cash for the 260-space lot wedged between the Bingham and the Archer apartment complexes on West Ninth Street. Details of the transaction don't show up in local property records, but the price and the identity of the buyers appear in documents filed with the U.S. Securities and Exchange Commission.
The parking lot slopes down from West Ninth to West 10th Street, reaching toward new development along the east bank of the Cuyahoga River.
Vintage Development Group of Willoughby once talked about building a 300-unit condominium project on the lot. But Vintage shelved those residential plans in 2005, citing rising construction costs.
Other developers have looked at the property as a potential location for new rental housing. But they've passed for one reason or another, including Vintage's asking price and the design and engineering challenges presented by the split-level site. The parking along West Ninth essentially sits atop the remnants of a building, high above the West Tenth-level spaces that end at an overgrown wall.
The parking lot starts on West Ninth Street and then drops off dramatically, to a lower level along West 10th Street.
Chip Marous, Vintage's managing member, did not respond to a request for comment about the sale. MVP Realty Advisors, the Nevada-based company that manages the two MVP real estate investment trusts, did not return a phone call.
Terry Coyne of the Newmark Grubb Knight Frank real estate brokerage, which was advertising the 2-acre parcel at an asking price of $6.5 million, declined to comment.
Tom Yablonsky, executive director of the Historic Warehouse District Development Corp., said he hasn't talked to anyone associated with the buyers. But he would love to see something bigger than parking on the property.
"I would hope it gets developed as a complementary housing project to what's happening on both sides of it," Yablonsky said, adding that the land could be a long-term, strategic investment because of its location near existing apartments, the growing Flats East Bank district and the planned Canal Basin Park along the river.
The West 10th Street portion of the property runs up to an overgrown wall. The remnants of a building are visible where the West Ninth Street portion of the lot drops off, sloping down toward the Flats.
Regulatory filings show that MVP REIT owns and buys both real estate and loans tied to commercial real estate, with a heavy emphasis on parking. MVP REIT II focuses on parking lots and garages. Real estate investment trusts assemble bundles of properties, mortgages or both. They must pay out at least 90 percent of their taxable income to stockholders in the form of dividends.
Quarterly financial reports filed May 16 show that MVP REIT and MVP REIT II actually bought a limited liability company that owns the Warehouse District parking lot, rather than purchasing the property outright. Real estate investors make acquisitions that way for accounting reasons, for project-financing purposes, to stay under the radar or to keep tax bills from rising to reflect the sale price of a property.
In this case, Cuyahoga County estimates that the parking lot is worth just over $3 million, much less than the real estate investment trusts paid.
MVP REIT has a 49 percent stake in the company that owns the parking lot, according to regulatory filings. MVP REIT II holds a 51 percent stake. Parking-lot operator SP Plus Corp. controls the lot through a five-year lease, but the new owners are eligible for a cut of the parking revenues. They're also on the hook for the property taxes, above a certain level.