Drever Capital Acquires Iconic 50-Story 1401 Elm Downtown Dallas Skyscraper Out of Bankruptcy
FOR IMMEDIATE RELEASE
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Oilman H.L. Hunt’s Greek Marble and Glass First National Bank of Dallas Tower, Designed to Look Like a Banker’s Pinstriped Suit, Occupies Full City Block in Downtown Dallas
Drever Capital Immediately Raised Redevelopment Budget to Transform the Tower into 335 Apartments, Luxury Hotel and Spa, Multi-Level Retail Shops, Restaurants
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Longtime Apartment Redeveloper Maxwell Drever Started Spending Millions Before Sale Was Closed to Redesign, Jumpstart the Transformation
Outdoor Terrace Rooftop Deck, Residents Lounge, Infinity Pools, Poolside Food and Drink Service, Firepits and Rain showers with Seating, Public Art Throughout, Fitness, Technology and Video Entertainment Centers, Dog Concierge and Dog Park, Among Amenities Planned for Downtown Residents
Tower was the fictional leather-floored office of wheeler-dealer J.R. Ewing on the “Dallas” TV series
DALLAS, TX. May 3, 2016—Drever Capital Management of Tiburon, CA. today announced it acquired out of bankruptcy 1401 Elm, a landmark 50-story office tower in downtown Dallas. Price was not disclosed.
Even before the sale closed on the property which has been saddled with problems, Drever pre-emptively launched increased redevelopment budget to jump-start conversion into 335 rental apartments, a 225- room luxury hotel and spa, multi-level retail shops, restaurants, plus an amenity-rich rooftop residents entertainment and relaxation deck.
The iconic building, solidly constructed with Greek marble and glass in 1965 by oilman H.L. Hunt for the First National Bank of Dallas, was designed to look like a banker’s pinstriped suit. It was the fictional leather-floored office of J.R. Ewing of the “Dallas” TV series.
The 1.5 million square-foot architectural landmark, vacant for the last five years, was sold by a partnership between New York-City based Olympic Property Partners and BDRC Partners, a Dallas development company.
“Maxwell Drever and his industry-renowned apartment and senior living redevelopment team took the virtually unprecedented step of committing literally millions in capital in launching the redesign and construction of 1401 Elm before he even owned it,” said Bryan W. Dorsey, CEO of BDRC in Dallas, a co-seller of the property.
Dorsey is teaming up with Steve McCoy, head of Drever Construction, to continue in his role as on-site developer, directing day-to-day activities and liaison with the city and community.
Drever, known for his team’s cost-effective multifamily redevelopments and expedited deal closings, replied that he saw 1401 Elm “as a responsible rare investment opportunity for the Drever family and especially our legacy, impact investment-minded investors. It was a perfect fit for our ‘doing well by doing good’ investment philosophy of adding value to troubled properties and transforming neighborhoods.”
Added Dorsey: “When Maxwell put 1401 Elm under contract, there was nothing that was going to stop him from getting it to the finish line. He took immediate action to start cleaning up the existing financial problems. He also charged Steve McCoy and to tackle the building’s inherent problems and we started on the demolition. 1401 Elm is the biggest demolition and abatement project in the history of the state of Texas.”
Dorsey is convinced the vacant Dallas office tower in the center of the city’s recovering and growing urban core was “quickly identified by Maxwell Drever and his acquisitions director, Tom Cabibi, as the perfect investment opportunity for his Lightning Club investment fund. 1401 Elm was on the market and sought after by a large number of successful local and national real estate developers and Mr. Drever had to seize the moment. His track record in transforming and owning apartments, especially in Texas, and his speed in putting up a non-refundable deposit before he even had a purchase contract allowed, him to separate from other potential buyers.”
“Further, he not only lived up to all his obligations in the contract without renegotiating the price,” said Dorsey, “he covered all creditors at 100% on the dollar. Plus, his team handled all the hiccups and worse that seem endemic when a property goes into bankruptcy. He’s turned the re-development engine back on. H.L. Hunt’s 1401 Elm star is being reborn again.”
Several significant changes have been made to what is considered to be the city of Dallas’ most extensive adaptive-reuse project. An earlier plan called converting the office building to 480 rental apartments with floor to ceiling windows to capitalize on the unobstructed views from the 50-story building.
The plan has been upgraded by the new owners to offer 335 apartments with high-quality finishes—from one-bedroom to top floor penthouses--and adding a luxury ho
tel in the tower. Several nationally branded hotel owners and operators have inquired about being involved but Dorsey said no decisions have been made.
Andres Construction of Dallas has been appointed construction manager by the new ownership.
Drever Capital re-engaged Jerry Merriman, principal in the Dallas architectural firm of Merriman Anderson to be lead architect on the mid-century contemporary glass and Greek marble structure. Merriman worked for Charles Dahl, the noted Dallas architect who designed the tower in the 1960s for H.L. Hunt. “We respect the tower’s original timeless design and will not change it, however, we’re enhancing it with new Greek marble that we’re adding to the building’s podium level.”
Merriman, who has worked for past owners said he also “respects and agrees” with the new ownership’s vision for 1401 Elm. “I like having an owner say ‘we want this to be a socially and environmentally long-term investment for my family and our legacy impact investors and we will spend money on the building to do it right and secure a LEED Gold designation.’”
The new redevelopment plan will include a multi-floor level of retail stores aimed at serving apartment residents, hotel guests and others living or visiting downtown Dallas.
The retail mix will take care of apartment and downtown residents’ daily shopping needs and for commuters using Dallas Area Rapid Transit (DART), the nation’s largest light rail system which connects directly to Terminal Two at Dallas-Fort Worth International and Love Field airports, according to Jack Gosnell, senior vice president, retail consultant and leasing broker with CBRE’s Dallas Urban Division. DART’s Akard Street Station is directly in front of 1401 Elm.
“The redevelopment plan is evolving and will include fashion shops and specialty retailers,” adds Amy MacLaren, vice president of CBRE, also a retail consultant, broker and Gosnell’s partner. “The original Neiman Marcus, its flagship store, is a block away and a Forty Five Ten fashion boutique is relocating across the street,” she said.
The CBRE brokers pointed out that 1401 Elm has 450 underground parking spaces. Another 450-plus spaces will be added by converting four of the bank’s storage floors to parking. “With 900-spaces, it will have more parking than any other downtown Dallas office building,” said Gosnell.
A collection of public art will be part of the redevelopment. “The art will reflect the dynamic future of Dallas and it will range from the street to the 50thfloor observation deck,” says Sharon Leeber, president of Architectural Arts, a Dallas fine arts consultancy heading the project.
Also being implemented by the development team is a home health care center, a Montessori-based children’s school and a senior’s daycare center which could benefit downtown to uptown residents and office workers.
Robert Kline, senior managing director the Equity, Debt and Structured Finance Group in Cushman & Wakefield’s Phoenix office, is bullish on Dallas’ re-energized central core and 1401 Elm’s new ownership. “I’ve sat in on a lot of lender meetings discussing Maxwell Drever deals over the last 10 years and I know he does them very well,” said Kline. “There are posers and there are closers and Maxwell is a closer who gets the deal done. And I’ve done a ton of development deals with Bryan Dorsey over the years. Bryan is this dynamic guy who starts his day at 5 am if not earlier and he puts his heart and soul into the deal, all day long and into the night.
“So when you have this unique opportunity –buying 1401 Elm –that take passion, fortitude and obviously money and takes the right personalities and the right mindset which both these men have,” contends Kline, “you support it. I highly doubt this deal, which, in being so supportive of Dallas’ downtown, could have been done by anyone else.” Kline is arranging the construction and permanent financing.
The new owner’s freshly unveiled redevelopment plan for 1401 Elm appears well received by local official real estate leaders and supporters of the city’s urban core revival. “It fills a huge revitalization void square in the middle of downtown by transforming this block-long old office building located on our rapid transit line to a vibrant residential, retail and hotel mixed use high rise that will attract new people to live or come downtown,” said John Crawford, CEO of Downtown Dallas, Inc.
(Maxwell Drever is no stranger to downtown Dallas. Since 1999, his family owns apartments in Mitchell Lofts, a converted cotton manufacturing plant. Drever’s current Lightning Club will be taking a position in the Elm high rise owns several apartment buildings in Dallas with over 1,000 residential units. Since the 1970s, the firm and its teammates have acquired or joint ventured over 170,000 apartments, primarily for families with workforce incomes. Tom Cabibi, Drever Capital’s acquisitions director, is continuing to look for challenged high-rises similar to 1401 Elm and portfolios of underperforming workforce apartment communities).
The lawyer representing the sellers said the new ownership topped other potential buyers with its presentation to the bankruptcy court. “The Drever group made a sterling presentation and the bankruptcy court found them to be the most credible and most likely to close on terms most favorable to the creditors,” said William. O’Connor, partner and co-chair of the Real Estate Capital Markets practice, Thompson & Knight, New York City. “Drever group was innovative and creative in precisely addressing issues that come with a project of this complexity to close the deal.”
With 1401 Elm out of bankruptcy, O’Connor said with Bryan Dorsey and Maxwell Drever joining forces on a new redevelop plan, downtown Dallas will benefit. “Bryan originated this deal, has lived and breathed it for 36 months, worked closely with the city to move it forward. In fact, Bryan and Maxwell are two of the hardest working guys I’ve ever met. Both are classic old school gentlemen.”
Dorsey contends the City of Dallas, the City Council including the Mayor’s office, have “been extremely—and continually--supportive of this project in so many ways. Their providing tax incentive financing is a prime example of helping make an uneconomic property eventually be economically viable. For the last five years, it has been 100% vacant and still is and, hence, virtually dead on the tax rolls. Our Councilman, Philip Kingston, has been an excellent and responsive sounding board on this project—restoring an entire city block to prominence.”
Downtown Dallas is 94% occupied and growing, said Steve Shepherd, chairman of the Downtown Residents Council which represents people living in 26 apartment and condominium buildings in the urban core. “When I moved downtown in 2005, there were only 1000 people here. By year end, we will be close to 10,000.” When 1401 Elm opens and is lit up again,” said Shepherd, “it will become a destination. Not only for the apartment residents, but for visitors, restaurant goers and shoppers. We’ve never had ground level retailers in the CBD.
One downtown Dallas resident, as a fellow Tiger 21 member with Maxwell Drever, is personally familiar with both the venerable office tower and Drever’s investment strategies and optimistic about the new redevelopment plan’s chances for success. Ben Patton, who describes himself as a “serial entrepreneur,” said “what I particularly like about the Drever investment philosophy that you see here in 1401 Elm is that he’s all about core real estate needs—core plus. It’s not catering to the ultra high end resident or the ultra low end. Drever focuses on working class middle and upper middle America with a quality product. And that’s what we’ll have here for people moving downtown.”
As an investor, Patton continued, “Maxwell’s investment funds are conservative. They’re not so aggressive on taking on debt. Not aggressive on leasing assumptions. Not aggressive on gilding the lily on a redevelopment or transformation. And he puts Drever family money into his deals. As a result, they’re one of the few property groups on the investment circuit that actually outperforms its targets. And with Maxwell as a white knight on 1401 Elm, it gives me confidence downtown Dallas can be invigorated.”
Another seasoned real estate investor said the rebirth of downtown Dallas is similar to what’s happening in the Brickell St. area of Miami where he lives. Vito Spitaleri, retired vice president and treasurer of Mars Inc., the global food company, points out “people today want to reduce their commute, live closer to their work and have access to shopping and entertainment. It’s all about cities coming back to life and people coming back from the suburbs.”
Spitaleri, who’s a legacy investor with Drever going back to the 1980s when Mars Pension Fund was investing in apartments bought from the Resolution Trust Corp. (RTC) and currently an investor on a personal basis in downtown Dallas in Drever’s Mitchell Lofts partnership –“a very solid investment” –also thinks the Texas city’s urban core “has a strong potential for resurgence if not a renaissance.”
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