Lender takes control of the Flats at East Bank restaurant and apartment building

CLEVELAND, Ohio — The signature building of the Flats East Bank entertainment area is under new ownership now that a lender has taken control of the property.

The Flats at East Bank building, which has restaurants on its ground floor and 240 apartments on its upper floors, had been on the market since October.

Daniel Burkons of Institutional Property Advisors Midwest, one of the agents working to sell the property, confirmed to cleveland.com that one of the lenders, Axonic Capital, had taken control of the property. In the wake of Scott Wolstein’s death, his family had been trying to sell the Flats at East Bank building for about $100 million to avoid foreclosure.

Two loans were taken out on the property. Axonic was owed about $16 million, while Apollo Commercial Real Estate Finance Inc. was owed about $80 million.

Burkons said they couldn’t sell the building for enough money to avoid foreclosure.

“We had a number of offers from national groups that were interested,” Burkons said. “It’s a great asset. But the amount of debt on it was more than what anybody was willing to pay at this time.”

Axonic Capital bought the property at auction on Thursday and will now step into the role as owner, meaning it also take on the $80 million mortgage left on the property.

Burkons said the building is still a strong example of Scott Wolstein’s legacy. Harrison Wolstein, Scott’s son, also stressed his family’s commitment to the area after the sale.

“My father, Scott Wolstein, leaves behind an incredible legacy in the Flats, carrying out the vision of my grandfather, Bart Wolstein, alongside my grandmother, Iris Wolstein, to transform Cleveland’s waterfront, against all odds, into a vibrant live/work/play district for all to enjoy,” Harrison Wolstein said in a statement.

“In the case of this building, market dynamics shifted as interest rates rose in the wake of inflation, making it very hard to transact – something we see across the real estate market. The Wolstein family loves Cleveland, hopes the new owners will take good care of the building for Clevelanders and looks forward to staying involved in the Flats and Cleveland more broadly.”

The building, part of Phase 2 in the development, was finished in 2015. The entire Flats East Bank project was a $500 million development involving about 25 acres along the east bank of the Cuyahoga River. Initial phases involved construction of a hotel and the Ernst & Young office tower along with Flats at the East Bank.

The Flats at East Bank building includes everything attached to the apartment building, including the parking garage and the retail space that holds Punch Bowl Social, Rum Runners and ESPN Cleveland.

The other buildings – unattached – like the Margaritaville and Lindsey’s Lake House, aren’t part of the property that the lender has taken control of.