Harwood International’s Financial Struggles
Dallas-based developer Harwood International has been facing significant financial challenges in recent months. The company has sold four office towers and taken a $100 million loan, while battling construction delays and additional foreclosures. County deed and financial records reveal a picture of struggle and financial hardship for the driving force behind the district north of downtown that bears its name.
The latest development in the saga is that the firm may lose Harwood No. 1, a development that it touts as Uptown’s first office development, as well as another vacant but valuable Uptown parcel. They’ve sold a handful of buildings to private equity firm TPG in recent weeks. The firm, which maintains dual headquarters in San Francisco and Fort Worth, has also given the Dallas developer a $100 million loan that could breathe new life into a delayed project.
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Harwood did not respond to requests for comments regarding the recent transactions. TPG declined to answer questions regarding the loan and its future involvement with Harwood. “That’s the first sign of distress,” said Sriram Villupuram, a professor of finance and real estate at the University of Texas at Arlington. “If you have to have some fancy financing for a standard office or retail property then … you’re in a world of trouble.”
Foreclosures and Sales
Harwood has faced at least four foreclosure threats this year. Two of them come to a head in early November. The latest is Harwood No. 1 at 2651 North Harwood St. The property is set for auction Nov. 4, according to Dallas County records. The nearly 106,000-square-foot office, known as the Rolex building, opened in 1984 and marked the beginning of the Harwood District.
The Dallas Central Appraisal District values the property at $25 million for tax purposes. Such estimates don’t reflect actual market value. The second property is an empty parcel of land at 2840 Bookhout St., in Uptown Dallas. The property is owned by Harwood-affiliated HIC Development XV LLC. A Google Earth image of the site from September shows a Harwood International advertisement at the property.
The Dallas Central Appraisal District values the land at just over $4.3 million for tax purposes. This auction is also set for Nov. 4. Harwood has already lost properties this year to foreclosure auctions and others were sold to raise funds. Harwood No. 4 was sold to Spear Street Capital in April, after the Dallas developer defaulted.
Properties Sold to TPG
The Dallas developer has also offloaded a handful of properties to TPG in recent weeks. From early September to early October, Harwood sold four of its towers to the private equity firm. TPG purchased Harwood buildings No. 2, 6, 7 and 10. Together, the properties total roughly 900,000 square feet. Harwood No. 6, also known as Saint Ann Court, was sold after being saved from the brink of foreclosure earlier this year.
Delays, a $100M Loan, and a ‘Rough Road Ahead’
TPG’s been a buyer for Harwood’s properties, but the hedge fund has also fronted the Dallas developer with a $100 million loan tied to various Harwood holdings. CoStar was first to report details of the loan. Dallas County records show Harwood has taken out loans for its delayed Harwood No. 15 project. Previous filings with the Texas Department of Licensing and Regulation show construction was supposed to begin on the 23-story tower in January.
The tower, at 3008 N. Harwood St., was to be completed in June 2027. Estimated construction costs were $127 million. Harwood-affiliated corporations leveraged more than just Harwood No. 15 against the TPG loan. Harwood No. 16, sports bar Happiest Hour, and a handful of parcels near North Akard Street owned by the firm are also among the properties held as collateral, according to deed records.
Global law firm Jones Day was to be the lead tenant in the new tower. It’s unclear how the construction delays will impact this. Jones Day did not respond to inquiries about whether the firm will move into the new tower once it’s finished. The firm currently has offices at Harwood No. 3.
Future of Harwood District
The district currently covers 19 city blocks and includes more than 3 million square feet of class AA office, residential and retail space. The firm has previously said the area will continue to grow, eventually covering 8.1 million square feet of office, retail, hotel and residential development. It’s unclear what comes next for the Dallas developer. The firm has not provided updates on the delayed Harwood No. 15, and it’s unclear when the future Harwood No. 16 might begin.
“The foreclosures, along with the absence of traditional bank financing for its construction loan, paint a picture of a rough road ahead for Harwood,” Villupuram said. “This implies that traditional banks deem Harwood’s portfolio too risky, and Harwood is likely giving up too much to a private lender to stay afloat.”
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Conclusion
In conclusion, Harwood International is facing significant financial challenges, including foreclosures, construction delays, and a lack of traditional bank financing. The company has sold several properties to private equity firm TPG and taken a $100 million loan to stay afloat. However, the future of the Harwood District remains uncertain, and it is unclear what comes next for the Dallas developer.
Frequently Asked Questions
Q: What is Harwood International?
A: Harwood International is a Dallas-based developer that has been behind the development of the Harwood District, a 19-city-block area in Uptown Dallas.
Q: What are the financial challenges facing Harwood International?
A: Harwood International is facing foreclosures, construction
