One of downtown Dallas’ prominent redevelopment projects, The National, is set to go into foreclosure next month. Starwood Capital Group will take over the 52-story mixed-use tower after owner Shawn Todd of Todd Interests confirmed the decision to the Dallas Morning News.
The National, formerly known as the First National Bank Tower, was transformed from a long-vacant office building into a combination of apartments, hotel rooms, offices, and retail space. Todd Interests and its partners invested about $460 million in the project at 1401 Elm Street. The redevelopment was supported by public incentives, including approximately $100 million in historic tax credits and $50 million in city tax increment financing.
Shawn Todd stated that his firm owes around $230 million on the property and will not contest the foreclosure. He attributed the decision to high interest rates, declining downtown property values, and apartment occupancy falling below 80 percent. “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 said. He added that negotiations with Starwood were amicable: “In 35 years, our firm has never lost money — this is the first year that it’s happened.”
The building originally opened in 1965 but closed in 2010 as demand for office space decreased. It remained empty for ten years before becoming one of Dallas’ largest urban restoration efforts.
Todd noted that more than $150 million has already been repaid to tax credit investors such as Stonehenge Capital and AHP, Warren Buffett’s tax-credit arm. Three years ago, refinancing with Starwood allowed Todd Interests and major investor Moriah Real Estate to recover about 90 percent of their investment; much of those funds were reinvested into the building.
Despite these efforts, market conditions did not improve as hoped. “The values aren’t there,” Todd said. “The loan is due, and we’re not going to continue to pay.”
This foreclosure follows Todd Interests’ recent sale of its stake in another local redevelopment project—the East Quarter—to J.P. Morgan Asset Management.
