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The owner of a large office tower in Deep Ellum once partially occupied by Uber has secured an infusion of debt financing that could help it lease up the building.
It was announced this week that Dallas-based Westdale Real Estate Investment and Management received the loan of more than $115 million from undisclosed Israeli investors to refinance three of its assets in Texas.
More than $63 million, or about 55% of the overall amount, will go toward refinancing debt owed on Epic I, a 282,873-square-foot office tower at 2550 Pacific Ave., according to Amir Giryes, who helped arrange the loan.
Giryes is founder of Southlake-based capital advisory firm Giryes Capital Group and managing partner of Southlake-based Pando Cos. Inc. He said both companies helped arrange the deal, structured as a five-year bond, for Westdale. The financing came from a syndicate of Israeli institutions, said Giryes, whose firms specialize in these kinds of deals between companies in America and Israel.
Westdale did not immediately respond to questions related to the loan.
The loan comes at a time when many owners of commercial property — especially office buildings — are having a tough time refinancing because of high interest rates and questions about valuations.
The Epic I tower, near the DART Deep Ellum rail station, is part of Westdale's broader transit-oriented mixed-use project just east of downtown Dallas called The Epic. The Epic has been held up as a major investment in a historic neighborhood that's struggled with some image issues — but also faced questions about its viability in a neighborhood known more for nightlife than corporate jobs.
There's also the Epic II tower, which spans roughly 470,000 square feet. In addition, the mixed-use development is home to retail space, the Kimpton Pittman Hotel and high-end restaurants including Komodo and La Neta Cocina.
Transportation company Uber Technologies Inc. used to be the anchor tenant of Epic I, occupying more than 50% of the tower. And it had planned to turn Epic II into a major regional hub.
But in 2021, the San Francisco-based ride-sharing giant pulled out of all of its state and city incentives deals after it fell short of providing the 2,500-plus jobs required. Uber now only occupies a portion of Epic II, at three full floors or nearly 70,000 square feet.
Uber's lease at Epic I ended when the company moved to Epic II in 2022. That left Westdale without substantial rental income to pay the initial lenders of the project, who were also a group of Israeli investors, Giryes said.
Westdale, which bought the site for The Epic in 1998, broke ground on Epic I in 2017 and completed it in late 2019. Current tenants in Epic I include Spaces, a coworking company, and Westdale itself. Uber once occupied floors nine through 15, totaling around 167,000 square feet.
Epic II was completed in 2022 at 2500 Pacific Ave. But Uber's big plans for the regional hub were scaled down during construction, leaving much of the space unoccupied. Uber has since tried to sublease more than 300,000 square feet of vacant office space in the building.
Unlike in Epic I, Uber's lease has not expired in the second tower. Other tenants in Epic II include DLR Group and Kimley-Horn.
The other two assets that were refinanced with the $115 million loan were a luxury apartment property in Irving called the Woodmeade and an office tower in north San Antonio called the Colonnade.
About $34.5 million, or 30% of the loan, went toward the Woodmeade, and $8.25 million, or 15% of the loan, was for the Colonnade, Giryes said. Both of these properties are stabilized, he said.
Westdale bought the Colonnade from Griffin Partners in 2012. The 10-story building is currently 74% occupied, according to a property description from Westdale.
"This transaction highlights the liquidity of the Israeli market," Giryes said in a statement. "Collaborating with a client like Westdale has been an exceptional experience, and the enthusiastic response from Israeli investors underlines their confidence."
The Westdale loan followed a recent $385 million financing deal from the Israeli bond market for the Bryant Park office tower in Manhattan, achieved despite the impending departure of anchor tenant HSBC next year, he said.
The $115 million loan represents Westdale’s third financing deal in Israel, Giryes said, adding the real estate firm has nabbed more than $400 million in financing via the Israeli capital markets.
Giryes said his team syndicated the bond with more than 20 institutional investors to "ensure optimal pricing and terms" for Westdale.
The loan comes amid myriad difficulties for the office market, from heightened vacancy to financing issues. However, the trend could see some weakening as some employers mandate return-to-office policies.
