MetLife takes control of Galleria Dallas from borrower

One of North Texas’ most iconic shopping attractions just changed hands — and just in time for Christmas.

After two decades, UBS Realty Investors, a subsidiary of the similarly named Swiss investment bank, has handed over ownership of the Galleria Dallas and its adjoining high-rise hotel at LBJ Freeway and Dallas Parkway.

A unit of Metropolitan Life Insurance has taken over the deed to the mall, as well as Westin Galleria Hotel. MetLife reportedly held over $315 million in loans on the Galleria dating back to 2014, according to the Dallas Morning News. County records show that UBS reached an agreement to hand over the mall and hotel to MetLife.

UBS first bought the three-level shopping center from Hines Interests for $300 million in 2002. A few years later in 2005, it bought the hotel for $95 million. The two properties were most recently valued for property taxes at just over $200 million.

The 1.9 million-square-foot center was originally developed by Hines Interests Limited Partnership in 1982 — the height of American mall culture. Then-named the Dallas Galleria, it cost at least $400 million — $1.16 billion adjusted for inflation — to build, ranking it as one of the most expensive construction projects that year, following Walt Disney Epcot Center.

In addition to all of its restaurants and retail tenants, the Galleria Dallas also has an ice rink and a glass vaulted ceiling that is modeled after the historic Galleria Vittorio Emanuele II in Milan. Today, it’s primarily known for having the tallest indoor Christmas tree in the nation.

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“Galleria Dallas and Westin Galleria Hotel are high-quality assets that are well-positioned in the Dallas market,” said MetLife spokesperson Dave Franecki. “While we cannot comment on the specifics of this transaction, MetLife Investment Management has a proven track record in institutional real estate and a dedicated team in the Dallas area.”

While the North Texas’ hospitality market is on the rebound post-Covid, the same can not be said for brick-and-mortar retail. Many of the large storefronts are shuttered at the Galleria, particularly on the third level.

“That’s been going on with a lot of properties in the mall category for a long time,” said Robert Young, an executive with Dallas-based retail real estate firm Weitzman. “Today, the mall occupancy is below 90 percent versus a market that is almost 94 percent for everything else.”

Malls have some of the highest vacancy rates among local retail centers with weakest local malls having vacancies topping 30 percent, according to Weitzman’s latest estimates. That’s why many of North Texas’ shopping malls have been the targets of large-scale redevelopments, such as Red Bird Mall in Southwest Dallas, the Collin Creek Mall site in Plano, and the Valley View mall in northern Dallas.

“Can malls be repositioned? In some cases, the answer is absolutely yes,” Young said.

— Maddy Sperling