Massive Dallas-area development threatened with foreclosure
A lender that provided more than $388 million to finance one of Plano's biggest real estate developments has filed to foreclose on the project.
Beal Bank put up the debt for the redevelopment of the Campus at Legacy West in Plano, Texas. The attorney appointed as the trustee to handle the foreclosure did not respond to requests for information.
For more than three years, developers Silos Harvesting Partners and Dreien Opportunity Partners have been working to convert the former J.C. Penney headquarters campus on Legacy Drive into a more than $1 billion mixed-use development.
Dallas-based Beal Bank and its Plano-based commercial loan service company, CLMG Corp., have quietly served notice to sell the project at foreclosure auction.
Such actions are common when borrowers are renegotiating the terms of a loan.
Developer Sam Ware, who heads the venture, said he's working with the lender to avoid a forced sale of the property.
"Yes, I am terribly disappointed and shocked that Beal Bank and CLMG Corp, have acted so aggressively six days after alleging a default on this loan we have had with them for over 1,100 days," Ware said in a statement. "We had a standstill agreement and they jumped."
In 2016, the 1.8 million-square-foot Penney office campus and surrounding land sold to Silos Harvesting and Dreien.
Penney consolidated its head offices into part of the project, and other sections were remodeled for new tenants, including NTT Data. Japan-based luxury hotel firm Kintetsu Enterprises Co. of America also bought a building site in the project, which is west of the Dallas North Tollway.
The Plano City Council nixed a plan last year to add apartment buildings to the project. But the developer has been working with the city to redesign that plan. Apartment builders Trammell Crow Residential and Kairoi Residential have agreed to purchase sites in the development.
Ware said in an email that the office portion of the development is now 75% occupied. And, he said, there are tens of millions of dollars in pending land sales on the campus.
Ware said he is working to get new financing for the Plano project.
"Our current appraisals have valuations in excess of $200 million above the first lien debt," he said. "We believe that inclusive of this and all pending land sales and pending leases, we will get the refinance accomplished.
"I am extremely optimistic that Beal and CLMG will work with us to resolve this matter, and I and my team can continue to do what we do: add value," Ware said.
The Campus at Legacy West foreclosure filing is the largest of this economic cycle in North Texas. It's bigger than last year's $130 million filing on Frisco's failed Wade Park development.