California-based Drever Capital Management has closed on 1401 Elm St. — a 50-story, 1.3 million-square-foot vacant tower that was once the tallest tower west of the Mississippi River — and plans to pick up the building's stalled redevelopment plans.
The real estate investment firm, which is led by Maxwell Drever, acquired the city block-sized property from bankruptcy court for $65 million.
Even before Drever closed on the tower developer by legendary Dallas oilman H.L. Hunt, he increased the previous $240 million redevelopment budget to start the conversion of the long-time vacant tower into an apartment, luxury hotel and spa, retail and restaurants and entertainment destination in downtown Dallas.
"You have to look at this project with a long-term approach," Bryan Dorsey, CEO of Dallas-based BDRC Partners, told the Dallas Business Journal."Mr. Drever sees this as a legacy project for his family. He put up money day one to secure his position in bankruptcy court and he spent money before he owned it."
He said the building, which has been vacant for the past six years, needs an owner with a long-term commitment to carry through with the project. After all, 1401 Elm was the biggest demolition and abatement project in the state's history, he said.
Dorsey, who was one of the stakeholders in the previous ownership group, will help Drever Capital oversee the redevelopment of 1401 Elm St. and will work with Steve McCoy, who is the head of Drever Construction.
Plans for the redevelopment have been altered slightly with fewer apartments and plans for a luxury hotel. Instead of 480 apartments, Drever plans to develop 335 apartments, a 225-room luxury hotel and spa, floors of retail and restaurant space and a rooftop entertainment and relaxation deck.
Construction is scheduled to resume Monday, with completion expected by the end of the first quarter of 2018.
The investor plans to apply for state and federal historic tax credits to help redevelop the 1965-era marble and glass building, which was originally developed by Hunt as the First National Bank of Dallas.
Drever, the 75-year-old real estate investor, said he saw 1401 Elm St. "as a responsible, rare investment opportunity for the Drever family and especially our legacy, impact investment-minded investors.
"It was the perfect fit for our 'doing well by doing good,' investment philosophy of adding value to troubled properties and transforming neighborhoods," he added.
The new development group declined to disclose the hotel groups eyeing the tower, which is expected to be renamed in the near future.
Dallas-based Merriman Associates Architects is the project architect. Andres Construction is the general contractor. Jack Gosnell and Amy MacLaren of CBRE | UCR is marketing the retail portion of the building.
In all, Drever plans to use the building's original 450 parking spaces, along with an additional 450-plus spaces on the property's storage floors, to park the building. The investor also plans to bring public art into the streetscape and the 50th floor observation deck in the tower.
Downtown Dallas Inc. CEO John Crawford said this acquisition is important to the city's urban core and fills a void square in the middle of downtown with plans for a vibrant mixed-use destination that will attract new residents and visitors.
Drever Capital has worked in Dallas since purchasing the Mitchell Lofts in 1999. Over the years, the firm has built its portfolio to more than 1,000 apartments. The firm's Tom Cabibi has continued looking for under performing properties, like 1401 Elm, to purchase and add to its holdings.