Dallas Dream Team Declares $600-Mil Victory

Palladium has always been part of the dream to redevelop a multi-million-dollar project on the Intown acreage. After some six years of hard work, Palladium has inked a letter of intent on 20 acres, thanks to the joint venture financial backing of CalPERS and MacFarlane Partners of San Francisco.

"It's a complicated deal and it doesn't get done overnight," Marty Burger, Palladium's chief investment officer, tells GlobeSt.com. Six buildings will rise as soon as the funding is in place, targeting a 2004 opening. He's not talking sf, but he is saying Victory will rise much sooner than the original game plan and the initial stage alone will constitute millions of sf.

The best part, says Burger, is the city reaps the benefit of stepped-up fiscal projections. The 20-acre mixed-use project will bring a return in excess of initial calculations for the entire 60-acre dream, which backers believed would take 20 years to develop and realize projects valued at $700 million. Now, Victory's "victory" lies in $600 million on one-third of the acreage. "The tax revenue should be three times what the city thought and a lot sooner than they thought," he says.

Burger says the design is being fine-tuned by architect Howard Elkus of Elkus/Manfredi of Boston. It will be well-rounded with retail, office, hospitality and multifamily flanked by plenty of open space. A 300- to 400-room hotel, W Dallas, will be managed by Starwood Hotels & Resorts Worldwide Inc. of White Plains, NY. Perot's Hillwood will handle the office leasing, but undoubtedly will or has already cut a third-party contract for the job and Palladium will negotiate retail leases.

Subsequent phases will break ground as the market dictates, emphasizes Burger. "Fortunately, we have a partner in Hillwood and Southwest Sports where we're not forced to take down the land and not forced to build in a market that can't support it," he explains.

Burger says it's undetermined at this point how much money will come from the joint venture equity backers. That, he says, will hinge on what can be had in the capital markets. But Palladium has other reasons to celebrate the deal because the joint venture also is backing other Palladium developments, including one in San Jose, CA. Officially, the joint venture is called the California Urban Investment Partners (CUIP to insiders), but in reality it's CalPERS and veteran real estate investors Victor MacFarlane of San Francisco and Chuck Berman of the East Coast. MacFarlane Partners is a leading real estate investment manager that's previously kicked in more than $6 billion into commercial undertakings as a core manager with an eye on urban, mixed-use projects.

Under the terms of the agreement, Hillwood and Hicks' Southwest Sports Realty retain a vested interest in Palladium's flagship product. Kingpins Perot and Hicks issued prepared statements about the new equity partner while providing only one news source with the upfront and in-depth perspective. Hicks perhaps speaks for all when he said "it takes more than Ross and me to make this new vision of Victory happen."

Victory's cornerstone, the American Airlines Center, opened this summer and that, said Palladium chairman Stephen Ross, cemented the vision. "With CUIP, we take a major step toward making this dream reality," he says.

Projects of this magnitude require "great partners, private equity and debt financing and public infrastructure. We have two of the three," says Palladium partner Kenneth Wong, "and we hope to work with city and county officials to devise a plan to put the public infrastructure in place."