An iconic downtown Dallas office building sold at foreclosure auction amid claims that its landlord Wolfe Investments defaulted on a short-term loan to purchase the property.
The blue-paneled tower at 211 North Ervay Street — once called an eyesore by former Dallas Mayor Laura Miller — was sold on Feb. 6 for $8 million to an entity tied to Wolfe’s lender, according to data from Roddy’s Foreclosure Listing Service. Thistle Creek Partners, a division of Thistle Creek Capital, provided the $13.2 million loan on the property.
The auction price was a little over $42 per square foot.
Syndicator Kenneth Wolfe’s Wolfe Investments made news less than a year ago when it scooped up the mid-century tower and announced plans to convert it from offices to apartments. Weeks later, Wolfe partnered with Dallas-based developer Bluelofts to purchase the landmark Star-Telegram Building and adjoining Oil & Gas in downtown Fort Worth. The developers are planning multifamily conversions for those two buildings.
But a December lawsuit claims that Wolfe cheated a short-term lender in the course of financing the purchases.
In the suit, Priya Capital CEO Niraj Shah alleges Wolfe and his wife, Teresa, defaulted on a short term loan Shah provided to help the Wolfes purchase 211 North Ervay.
Shah loaned the Wolfes $6.15 million to be paid back by May 8, 2023, according to the lawsuit. When the Wolfes failed to pay back the loan by the maturity date, Shah attempted to work with them to avoid default, he said. The loan had not been repaid at the time the suit was filed.
In exchange for the loan and the modification, the Wolfes agreed to transfer minority ownership in real estate entities their firm owns to Priya Capital, according to the lawsuit. Those entities include 45 Erieview Developers, likely tied to an office building in Wolfe’s portfolio at 45 Erieview Plaza in Cleveland, Ohio.
They also agreed to assign Shah 15 percent membership interest in Wolfe 211 Manager LLC, likely tied to 211 North Ervay, and 10 percent interest in 309 Oil Gas Highrise LLC, tied to the Fort Worth oil and gas building, according to the Tarrant Appraisal District. Shah would also be appointed as manager of that property, the lawsuit states.
To secure the first note, the Wolfes pledged a first priority security interest in 100 percent of their interest in Wolfe RE Mgmt. LLC. The second note was secured by an agreement that gave Shah 40 percent of the membership interest in 309 as well as the right to force a sale of 309’s property upon default.
In the lawsuit, Shah claims the Wolfes did not use the loan to purchase 211 North Ervay, but rather to open a line of credit to obtain lending for the purchase of the Oil & Gas Building.
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