Westdale secures refi for vacancy-stricken office development

Westdale Real Estate Investment and Management has obtained refinancing that could revitalize leasing efforts for a Deep Ellum office tower plagued with vacancies after losing Uber as a tenant. 

Dallas-based Westdale, headed by President and CEO Joe Beard, has secured over $115 million from Israeli investors to refinance three properties in Texas, including the Epic I, at 2550 Pacific Avenue, Dallas Business Journal reported. The identity of the lender, a syndicate of Israeli institutions, wasn’t disclosed.

The financing was arranged by Amir Giryes, founder of Southlake-based Giryes Capital Group and managing partner of Pando Companies. More than $63 million of the loan, approximately 55 percent of the total, will refinance debt on the Epic I, which spans 282,900 square feet. The loan is structured as a five-year bond.

The loan also refinances the Woodmeade, an apartment complex in Irving, with $34.5 million, and the Colonnade, an office tower at 9910 Interstate 10 West in north San Antonio, with $8.25 million. The debt for that 168,000-square-foot building comes to $49 per square foot. Westdale bought it in 2012, and it is 74 percent occupied.

The Epic I, located east of downtown Dallas near the DART Deep Ellum rail station, is part of Westdale’s mixed-use development called The Epic. The complex also includes restaurant and retail space and the Kimpton Pittman Hotel. 

Since it was developed in 2019 in anticipation of a planned Uber hub, the development has been hit with major leasing problems.

Uber had occupied more than half of the building. But the ride sharing company pulled out of its deal for subsidies from the state of Texas and the city of Dallas after it scaled back its plans and failed to hire 2,500 Dallas employees, as required by those deals. It moved to Westdale’s adjacent Epic II in 2022, where it leases 70,000 square feet across three floors.

Epic II spans 470,000 square feet, and Uber has put over 300,000 square feet on the sublease market. Other tenants at Epic II include DLR Group and Kimley-Horn. 

Epic I’s tenants include coworking company Spaces and Westdale itself. A JLL listing for the building shows that 10 of its 16 floors are available for lease.

This is Westdale’s third major transaction with Israeli investors, bringing its total secured funds from Israeli capital markets to over $400 million. 

“This transaction highlights the liquidity of the Israeli market,” Giryes said. “Collaborating with a client like Westdale has been an exceptional experience, and the enthusiastic response from Israeli investors underlines their confidence.”

The transaction ultimately underscores the challenges in the office market, including high vacancy rates and refinancing difficulties, but it allows Westdale to compete for tenants and lease up its building.

— Andrew Terrell 

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