Downtown Dallas' Skyscraper Redevelopment Lands $67 Million in Funding

Developers redoing one of downtown Dallas' biggest skyscrapers have gotten $66.7 million in funding that removes the threat of foreclosure of the high-rise.Drever Capital Management this week secured a bridge loan from Starwood Property Trust, the New England-based firm that's the country's largest commercial mortgage real estate investment trust.The money will be used to continue redevelopment of the 52-story former First National Bank tower on Elm Street."They have done $30 billion in transactions," said developer Maxwell Drever. Starwood Property Trust chairman "Barry Sternlicht himself personally handled this to make sure it went over the finish line."The $380 million Elm Street skyscraper project is the largest such redevelopment in Dallas history. The vacant office tower - built in the 1960s - is being converted into a combination of apartments, hotel rooms and retail space called The Drever.The new financing comes less than two weeks after another lender declared a $55 million loan on the project to be in default."When this complication arose we had another lender lined up to take care of it and Starwood said they would do it," Drever said.He said the previous loan was paid off.JLL Capital Markets worked with Drever Capital to line up new financing for the 1.5 million square foot project.Robert Kline, managing director of the firm's western region, said a number of financial sources were interested in the transaction."Starwood worked through it, did their background investigation and they closed the loan," Kline said. "They know what they are committing to."They believe in downtown Dallas and the future of the project."Drever Capital has also qualified for $95 million in historic tax credits for the Dallas project and has lined up two institutional tax credit investors.The tower - built in 1961 - is being redeveloped into 300 apartments, a 200-room luxury hotel plus retail space.The first apartment phase of the building will open late next year.There will also be a 12,000-square-foot food hall."It's going to be a real magnate for downtown Dallas office workers and residents of other communities," Drever said. "It will be a real showplace."Dallas' Merriman Anderson/Architects designed the project, which is one of the largest skyscraper redevelopments in the country. Andres Constriction is the general contractor.California-based Drever Capital Management acquired the project out of bankruptcy in 2016.The city of Dallas has agreed to provide $50 million in financial incentives to give the old skyscraper a new life. The tower is the last major downtown Dallas building awaiting a redo.The project is even larger than the just-completed Statler Hotel renovation, which cost more than $250 million."We're eager to move forward with the remainder of the project's permanent financing," said Jerry Tonn, Drever Capital Management asset manager. "The work is continuing and everything is being paid."We're are targeting a phased occupancy the apartments in the fourth quarter of 2018 and the hotel in the first quarter of 2019."Landing the loan from Starwood Property Trust gives the Drever project a strong financial endorsement.The Connecticut based company has funded development including the $475 million Hudson Yards project in Manhattan and a new $480 million mixed-use skyscraper in San Francisco."All of the historic preservation and revitalization projects over the last decade in downtown Dallas have given the center of our city a new life," Kourtny Garrett, president of Downtown Dallas Inc., said in a statement "The Drever, as one of our last and largest vacant buildings is holding true to that."We look forward to its impact on creating jobs, energy and excitement in the heart of downtown."  Continue reading...