The lender behind one of downtown Dallas’ most ambitious redevelopments took back the keys.
Starwood Property Trust acquired The National, a 52-story mixed-use skyscraper at 1401 Elm Street redeveloped by Shawn Todd’s Todd Interests, after a foreclosure auction Tuesday on the steps of the George Allen Courts Building.
The Dallas Morning News reported that ownership reverted to the Starwood Capital Group affiliate at a listed purchase price of $207 million, with existing debt used to buy the property.
The loss comes amid a torrent of bad news for Downtown Dallas, which is set to lose office tenant AT&T when it relocates to Plano.
The foreclosure of The National wasn’t a surprise. Todd told the publication last month that he owed Starwood roughly $230 million and would not contest the proceedings. Starwood filed for foreclosure in early January.
Todd pointed to the same pressures hitting downtown office and mixed-use assets across the country: high interest rates, falling property values and thinning occupancy. Apartment occupancy at The National had dipped below 80 percent, Todd said, and refinancing talks with Starwood failed to produce a viable path forward.
“With our debt balance, the interest rate environment and property values downtown, we don’t see a path to us recouping our remaining equity,” Todd told the publication at the time, calling it the first time in 35 years that his firm lost money.
That loss is a steep reversal for a project once held up as a model for large-scale urban reuse. Todd Interests poured more than $460 million into redeveloping the long-vacant former First National Bank Tower, which sat empty for a decade before its transformation. The 1.5 million-square-foot midcentury skyscraper was converted into a mix of apartments, hotel rooms, offices, retail and restaurants.
When the deal was unveiled in 2019, Todd described it as the largest historic tax credit transaction in Texas. The project relied on about $100 million in historic tax credits and $50 million in Dallas tax increment financing to pencil out. Designed by prominent Dallas architects George Dahl and Thomas Stanley, the 1965 tower had been the largest vacant building in North Texas when it closed in 2010.
What comes next for The National is an open question. All six restaurants, including Italian steakhouse and seafood hotspot Monarch, are expected to remain open, according to prior reporting.
The foreclosure lands amid a broader reshuffling for Todd Interests. Just months ago, the firm sold its entire stake in the 20-acre East Quarter development to partner J.P. Morgan Asset Management for an undisclosed price. Along with The National, Todd Interests has been behind several marquee redevelopments, including the $300 million overhaul of Energy Plaza into the Sinclair.
— Eric Weilbacher
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