FORT WORTH, Texas — Read this story and more North Texas business news from our partners at the Dallas Business Journal
Fort Worth's tallest building finds itself embroiled in drama as mechanic's liens and lawsuits against the owner of Burnett Plaza pile up from contractors who say they haven’t been paid for renovations.
Since May 2023, contractors have filed 10 mechanic's liens totaling more than $1.6 million against an entity connected to New York-based Opal Holdings LLC, the owner of the 40-story tower on Cherry Street in downtown Fort Worth, according to Tarrant County records. The landlord has also been released from an additional five mechanic’s liens totaling more than $168,000.
Such liens are a way for contractors and subcontractors to try to force payment for construction work. They typically must be resolved before the owner can sell a building or acquire a clean title.
The largest lien, for almost $1 million, was filed Jan. 12 by Tarrant Construction Services Ltd. for work it said it completed to remodel two suites and the 19th-floor bathrooms.
Meanwhile, Tarrant Construction, JLL Group Inc. and Larry Short & Associates LLC, another contractor, have also filed lawsuits against Opal, the company it formed to manage Burnett Plaza and Shaya Prager, a founding member of the firm. Combined, those lawsuits claim more than $1.6 million in damages.
The allegations against Opal at Burnett Plaza exemplify the real estate challenges felt across the country, especially when it comes to older office space. Numerous buildings across Dallas-Fort Worth have fallen into financial trouble; some have even been foreclose upon.
Opal has also experienced setbacks at some of its other U.S. properties.
The firm did not respond to phone calls or emails from Dallas Business Journal. Attorneys representing Opal declined to comment, citing pending litigation.
Opal bought Burnett Plaza for $137.5 million in 2021. The building, completed in 1983, encompasses more than 1 million square feet. Tenants include General Motors Financial Co. Inc., Kimley-Horn and Associates Inc., Huckabee Inc. and Freese and Nichols Inc.
A lot of the allegations are tied into a feud between Opal and lender Pinnacle Bank. The bank provided $83 million in financing to help Opal purchase Burnett Plaza.
Ronny Korb, charter president in Texas for Pinnacle, could not be reached for comment.
In an April 2 lawsuit filed in Tarrant County district court, Opal and related entities alleged Pinnacle Bank has tried to push the building into default
The bank "has used ... unfounded defaults or potential defaults to take over the overall management and operations of Burnett Plaza,” according to the suit.
Opal and a related entity, Burnett Cherry Street LLC, claim Pinnacle refused to allow payment to Tarrant Construction for tenant improvements from a reserve account used for covering maintenance costs. Pinnacle did not consider tenant improvements to be maintenance costs, according to the suit.
Pinnacle claimed a default by Opal and Burnett Cherry Street for the nonpayment. And as a result of Tarrant Construction’s lien and lawsuit against the landlord, Pinnacle has claimed additional defaults, according to allegations made in court.
Pinnacle has taken control of Burnett Cherry Street’s operating accounts and directed tenants of the building to make payments directly to the bank, according to the lawsuit.
Opal Holdings faces pressure elsewhere
Opal's real estate portfolio across the country totals more than $4 billion, according to its website.
During the pandemic, the company went on a buying spree of suburban office spaces, borrowing and investing billions into office real estate other investors shied away from, lawyers representing Tarrant Construction noted in the company's lawsuit against the landlord.
The Real Deal reported in August 2022 that Opal had dropped $2 billion on office buildings — the part of the market most upended by the pandemic, with many companies rethinking their workplace needs. Opal closed deals even as the cost to borrow surged amid interest rate hikes prompted by the Federal Reserve.
An entity tied to Opal has been sued by Minnesota credit union Wings Financial, which seeks to foreclose a portion of the largest office park in the Twin Cities metro, according to an April 1 report by Minneapolis/St. Paul Business Journal, a sister publication of DBJ. Wings Financial claims Opal defaulted on a $40.3 million mortgage.
Market comparisons
Steve Triolet, senior vice president of research for Partners Real Estate, said Burnett Plaza’s vacancy rate sits at 26.5%, compared with 11.5% for Fort Worth's downtown central business district. He said Burnett Plaza's high concentration of large, publicly traded companies is partly to blame, as many of these businesses went on the defensive during the pandemic and shrunk their real estate footprints.
The largest tenant in the building is GM Financial, which leases more than 270,000 square feet across several floors. In 2020, civil engineering firm Freese and Nichols announced plans to take 72,000 square feet of space inside the building, moving in a year later.
The U.S. government’s real estate property and leasing branch also has three floors.
The Department of Housing and Urban Development and the U.S. government’s real estate property and leasing branch have three floors each.
"It's not 50% vacant, like some of these properties are, but [26.5%] is not a super great number," Triolet said.
Overall, Fort Worth’s downtown area is doing better than many cities, Triolet said. But the area is still challenged by its large number of older buildings. Across DFW, more than 100 million square feet of property was constructed in the 1980s. Now, older buildings aren’t as competitive as brand new ones, he said. Burnett Plaza last underwent renovations in 2021.
"If you're more than 20 years old, if your property hasn't been renovated, if it doesn't have amenities, it's generally out of favor for most of corporate America at this point,” Triolet said.
Some investors are turning older buildings into apartments in Fort Worth. Not all have succeeded. Wolfe Investments LLC planned to turn downtown Fort Worth’s iconic Oil and Gas building into apartments. Legacy Bank & Trust, the lender on the building, in February acquired the deed from Wolfe after pushing for foreclosure.
Editor's note: A previous version of this story reported the incorrect amount of space occupied by Freese and Nichols within Burnett Plaza and misidentified another tenant that had already moved out.
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