The debt lender for the 1401 Elm St. building in downtown Dallas has filed public records stating that the building’s developer is in default on a $55 million loan for the property. These records do not indicate foreclosure, however, they do indicate an administrative step toward that end.
The building’s developer, Drever Capital Management, has released a statement saying, “We remain in ongoing discussions with the lender. While we are on track in closing new financing, construction continues and we are looking forward to completing construction on schedule in 2019.”
Redevelopment plans include turning the skyscraper into a mixed-use project with apartments, a Thompson Hotel, office space, restaurants, and retail. Drever acquired the troubled property out of bankruptcy in mid-2016. Since Drever Capital’s purchase, former local partner, BDRC Partners, abruptly exited the project. In June, the developer was granted an extension of its $50 million TIF agreement, and was exploring options to monetize the TIF.
From the public filing: “… Default has occurred in the payment of the indebtedness, and or a portion of the indebtedness and is now due and payable, but has not been paid …”
The filing also states that the lender, GCP Income Opportunities LLC, has replaced the original trustee with substitute trustees, all of whom are attorneys at Winstead. The removal of a trustee and appointment of another is a process by which a lender grants the right to “sell the property to satisfy a portion or all of the indebtedness then due and payable.”
“A removal of trustee and appointment of substitute trustee means that the lender is taking administrative steps in the event that it chooses to push forward with a foreclosure,” says Joseph Cahoon, director of SMU’s Folson Institute for Real Estate. “It does not necessarily mean that the lender is pushing forward with foreclosure.”
As of Tuesday afternoon, the property had not been foreclosed on and several construction workers were still seen working at the property.