RCA in the commercial property press:

German Investors Set to Take Control of Troubled Victory Park Project in Dallas

National Real Estate Investor reports: Once touted as a landmark case study in urban regeneration, the financially troubled Victory Park mixed-use project in Dallas is in the final stages of reverting back to its German-based institutional backers.


Hillwood, a Fort Worth-based development firm run by Ross Perot Jr., is negotiating to cede control of the developed portions of the project to US Treuhand, an organizer of German closed-end funds based in Hamburg.


Located just north of downtown, in 2008 Victory Park celebrated the 10th anniversary of its formal approval by the City of Dallas. Over the next 10 years, the project was set to include 12 million sq. ft. of office, retail and residential space on a 75-acre brownfield site spanning 33 city blocks.


To date, only $1 billion of the total projected $3 billion development has been completed. That includes the 20,000-seat American Airlines Center sports arena, home to the NBA’s Dallas Mavericks and the NHL’s Dallas Stars, a 33-story W Hotel, four residential buildings and three office properties. Future phases of office, retail and residential components are now on hold.


“Hillwood Victory is in negotiation with its equity partner, UST XVI LP, regarding the future of the existing vertical development at Victory Park,” Hillwood said in a statement. “We are working together to bring a fresh infusion of capital to the District to enable Victory Park to move forward with new restaurant and retail development. Our highest priority has been and will continue to be the success of Victory Park.”


Market watchers agree that it was a case of bad timing. In its rush to create a landmark destination within the North Texas Metroplex, Hillwood’s luxury retail tenants have suffered from today’s depressed economic environment. Its high-end condominiums have also not achieved expected sales volume. But Victory Park is certainly not alone in its troubles.


“I believe you would be hard pressed to find a major development project anywhere in the country that is not under tremendous pressure due to the changes in the debt markets,” says Dan Fasulo, managing director with Real Capital Analytics, a New York-based research firm.