Foreclosure of the Greystar Tower in Dallas

Areeif Lender W LLC, linked to New York-based Ares Commercial Real Estate, has taken over Greystar’s Gabriella skyscraper, located in East Downtown Dallas.

According to a major local news outlet, Charleston, South Carolina-based Greystar obtained a $127 million loan from Areeif Lender W LLC in 2020. Last week, this lender reportedly offered $80 million in a foreclosure auction in exchange for the property, according to Curtis Roddy of Roddy’s Foreclosure Listing Service, which monitors foreclosures.

Gabriella is a 14-story residential tower that opened in 2020. It features 378 apartments and a 56,000-square-foot Tom Thumb grocery store. Rental prices at The Gabriella range from $1,487 to $4,281, offering units from studios to three-bedroom apartments.

The building also boasts luxury amenities such as three conference rooms, an infinity pool, a yoga studio, a golf simulator, select units with standalone showers, French-door refrigerators, and wine coolers.

The property is adjacent to the former Elan City Lights apartments, where a crane accident tragically killed 29-year-old Kiersten Smith in June 2019. After the incident, a jury held Greystar responsible and awarded $860 million to Smith’s family.

According to the same news source, Greystar recently put its 23-story Ascent apartment tower in Victory Park up for sale, and in 2022 it developed 11,351 units, placing it second on the National Multifamily Housing Council’s list of top 25 developers for 2023. Additionally, it is the largest manager in the country, with 726,826 units on NMHC’s latest list. Specifically, in the Dallas area, Greystar manages 120 rental properties.

The recent foreclosure of Greystar’s Gabriella building was the most significant forced property sale by lenders in the Dallas area. However, it is important to note that most foreclosure issues in the Dallas metro area have been limited to office spaces, unlike Houston, which has seen an increase in foreclosures of apartments and residential units.

For example, owners of Class C properties, such as Dallas-based Applesway Investment Group, have been the most affected, defaulting on nearly $230 million in loans on Houston properties last month. Initially, investors could not acquire enough Class A properties, so they began looking for Class B properties, ultimately acquiring more Class C properties. All of these were finally traded with very similar capitalization rates, which experts say caused failures in the business model implemented in the city.

Many investors purchased apartments with low-cost debt. When interest rates rose, these owners faced skyrocketing expenses as rent growth slowed. “In 2021, no one anticipated that rates would increase,” said Avasarala, founder of Stryker Properties.

Available Foreclosures:

Dallas: 5 homes available.

Houston: 8 homes available.

By Elias DaSilva | October 1, 2024