CLEVELAND — One of Downtown Cleveland's largest — and grandest — buildings is headed toward the auction block, despite a local developer’s attempts to stop a sale.
On Tuesday morning, a federal court judge said the owner of the historic Union Trust Building is out of time. Judge Charles Fleming said an affiliate of the Millennia Cos. has had plenty of opportunities to repay troubled debt and hang on to the vacant property, a roughly 1.4 million-square-foot landmark at East Ninth Street and Euclid Avenue.
The judge’s order clears the way for a sale process to start this month, culminating in a potential auction on Nov. 3. Cleveland-based Millennia had been seeking an extension through Sept. 30 to pull together new financing and end a foreclosure by Deutsche Bank.
RELATED: Court puts receiver in charge of the massive Centennial project in downtown Cleveland
Now, the court-appointed receiver — an outside expert overseeing the sale process — says he’s moving forward. But Millennia, which has been crafting a rescue plan involving a California-based bank and an AI data center group, isn’t giving up.
In an emailed statement on Tuesday afternoon, a spokeswoman said the ownership group is still “committed to bringing together the financing, partners and project leadership necessary to make this redevelopment a success … We respect the legal process and will continue working through the appropriate channels to advance a path forward.”
Court records show Millennia, which bought the building in 2018 and started calling it the Centennial, is working with a company called Hyperscape Digital. That company has AI data center campuses in various stages of development across the country.
On its website, Hyperscape Digital lists several properties in Texas, one in Delaware and one in Ohio. The Ohio project, called the Opal, is described as “a vertical AI campus” in a single building, offering 30 megawatts of power. The location of that project isn’t clear.
Details about the Opal are on a password-protected section of the website, which requires viewers to sign a non-disclosure agreement. Hyperscape Digital did not respond to an inquiry about the Centennial from News 5.
A Millennia spokeswoman provided some details about the evolving redevelopment plans but wouldn’t answer questions about Hyperscape Digital’s role. The ownership group now imagines the building as a “mixed-use, integrated technology campus.”
The current proposal calls for 200-plus apartments (down from 868 apartments in previous plans), about 420,000 square feet of office space, a hotel, retail and other uses. That includes “advanced technology space” and a restored bank hall that would function as a convention and event space, hosting major tech conferences and other gatherings.
“The technology component is intended as an innovation and R&D facility that would support a potential anchor technology tenant,” the spokeswoman wrote.
A letter submitted to the court on Friday shows that Hyperscape Digital has been in talks with Citizens Business Bank, based in California, about a $50 million loan to replace existing debt on the property.
Deutsche Bank initiated foreclosure proceedings against Millennia and its founder, Frank Sinito, in late 2023 over more than $33 million in unpaid debt. Millennia defaulted on its loan payments in 2023 but managed to negotiate short-term deals to stave off a lawsuit, according to court filings.
Millennia has been trying to work out its own sale or restructuring deal, with the goal of hanging onto valuable state incentive commitments, including $65 million in tax credits and a $10 million grant for asbestos cleanup, lead-paint removal and other clean-up work. None of that money has been spent.
“The Centennial is more than a real estate asset,” a Millennia spokeswoman wrote in an emailed statement. “It is a landmark property with the potential to support job creation, activate downtown, generate long-term economic value and deliver lasting benefits for Cleveland, the region and its residents.”
The company is still working to secure new financing by the end of this month.
But it’s clear Deutsche Bank — and the court — are out of patience.
“The time has come for the Centennial building to be sold, and without any further delay,” attorneys for the lender wrote in a recent court filing.
John K. Lane, the receiver, said potential buyers needed clarity. Millennia’s requests for more time to get a deal done were threatening to delay the court-approved sale process and making some prospective bidders skittish.
During a phone interview Tuesday, Lane said the court’s decision clears a path for a sale, starting with the selection of a stalking-horse bidder on Sept. 15.
A stalking-horse bidder makes a pre-approved, initial offer during a court-authorized sale process, establishing the price that other bidders must beat. If there’s enough interest from other eligible bidders, the Centennial will go up for auction in early November.
Lane said Millennia can participate in that process, which the receiver is conducting with Gordon Brothers, a company that specializes in troubled businesses and properties.
“I know there’s a lot of people who are concerned that Frank has now ‘lost the building’ or lost control of the building,” he said of Sinito. “All is not lost.”
But other potential buyers — from Northeast Ohio, the East Coast, West Coast and other countries — are sniffing around, he said.
“This building is a critical asset for the city of Cleveland,” said Lane, the CEO and managing director of Inglewood Associates, an advisory firm based in Mentor. “While my primary responsibility is to get the highest and best offer for the building, I also have a very strong interest in seeing that this building gets put back into use.”
The Union Trust Building has been languishing for more than a decade. Millennia, a major downtown landlord, is the third owner in a row to attempt a revival. But the company has to navigate a pandemic, inflation and other challenges.
In early 2024, the U.S. Department of Housing and Urban Development barred Millennia — a major owner of affordable housing — and Sinito from entering any new federal contracts for five years. The agency accused Millennia's housing arm of misplacing or misappropriating millions of dollars from HUD-insured or HUD-subsidized properties.
In October 2024, agents from HUD and the U.S. Department of Agriculture, which also provides financing for affordable-housing projects, raided Sinito's house in Waite Hill, a Lake County village. The two agencies have not provided any updates on their investigation.
Millennia has been trying to exit the affordable-housing business in favor of focusing on market-rate apartments and its Northeast Ohio portfolio, which includes Key Tower. Sinito stepped down as the company's CEO last year.
Michelle Jarboe is the business growth and development reporter at News 5 Cleveland. Follow her on X @MJarboe or email her at Michelle.Jarboe@wews.com.
