The lender backing one of Dallas' biggest office conversions in the city's central business district now owns the property.
An affiliate of Starwood Capital Group is the new owner of The National, a 52-story skyscraper at 1401 Elm St. covering a full city block that was transformed into a mixed-use hub, after a foreclosure auction last week. The property's former ownership group, including Todd Interests and Moriah Real Estate, owed an outstanding $207 million, according to Dallas County records.
The "borrower defaulted under the terms of the loan documents by failing to pay to current lender the entire unpaid principal balance, all accrued and unpaid interest and all other amounts due under the loan," according to deed records. Miami Beach, Florida-based investment firm Starwood did not immediately respond to a media request from CoStar News seeking information on its plans for The National.
The tower includes hundreds of apartments, hundreds of hotel rooms under the Thompson Hotels Dallas banner, as well as office and retail space.
Shawn Todd, founder of Todd Interests, told the Dallas Morning News that declining property values in downtown Dallas, cost of debt and elevated interest rates were the factors behind him handing The National back to the lender. The move comes after Todd Interests has sold its real estate stakes in other downtown Dallas assets.
The city's central business district has faced upheaval lately with AT&T unveiling plans to exit its longtime downtown Dallas headquarters for a large campus in the suburbs in the years ahead.
The telecom giant's impending move is part of a broader trend outlined by CoStar's Market Analytics Director Bill Kitchens in his latest market report as a so-called "flight to new" real estate, with aging downtown Dallas office towers unable to keep pace with their newer and more efficient rivals. Dallas' central business district has a vacancy rate surpassing 27%.
The National was last valued for the tax rolls at $231 million, according to the Dallas Central Appraisal District.
The redevelopment of The National is known as one of Texas' largest adaptive reuse projects and the biggest conversion project in the city of Dallas. Todd led the $460 million conversion project that received $100 million in historic tax credits and $50 million in Dallas tax increment financing funds.
The 1960s-era skyscraper was acquired by Todd Interests and Moriah Real Estate in 2019 after being empty for about a decade. The tower was the tallest skyscraper west of the Mississippi River when it was built by legendary Dallas oilman H.L. Hunt.