The Dallas Morning News
When others might have run, he stayed
Investors are taking a victory lap at Dallas’ Victory Park
Lothar Estein might seem to be an unlikely savior for a troubled Dallas real estate project.
The Germanborn real estate investor had sunk almost $200 million of his company’s money in the Victory Park development back when the project was circling the drain.
That was in 2009, when the Great Recession pushed the $3 billion mixeduse project near downtown Dallas to the brink of bankruptcy.
Victory Park was the largest and most visible property market victim of the economic downturn.
And Estein represented European investors who had bankrolled the ambitious complex touted as a new city to replace an old industrial district.
When the recession hit, sales of pricey condos at Victory Park stalled, and highend retailers closed their doors.
“It started out very well, but they were not prepared — like the most of the U.S. — for the real estate crisis,” Estein said. “That was like an earthquake for the project.”
With Victory Park teetering on the brink of foreclosure, Estein’s company, US Treuhand Group, didn’t run from the deal.
“I knew it would be a long, tough road,” Estein said. “Instead of selling all the assets, recovering what we could and moving on, we took a more difficult path.
“I had to throw in $30 million of my own money to settle with the lenders,” he said. “Everybody was telling me I shouldn’t do it.”
Estein, who is 68, grew up in Germany and got a degree in business and engineering. In the late 1970s, he began investing in U.S. real estate.
Since then, Estein has done more than $6.5 billion in U.S. real estate deals with almost 8,000 German investors participating in the transactions.
Victory Park had the potential to be a real disaster for Estein and his partners. European press reports said the more than 1,700 private German investors in Victory Park faced losing all their money.
Victory Park developer Hillwood agreed to hand over its ownership in the 33story W Hotel, residential and retail buildings and office space in Victory Park.
Estein worked out a new debt agreement with primary lender Wells Fargo and took over operation of much of Victory Park.
“We knew it would take time,” he said. “We are not from Texas, but we have a Texas mentality — we don’t quit.
“We never went into a city and left a disaster behind.”
Estein teamed up with Fort Worthbased Trademark Property Co. to redevelop Victory Park’s retail space. And the company sold off development sites in the project for more than 3,000 new apartments.
The oncederelict storefronts at Victory Park are now almost 90% leased. Only a couple of prime construction sites remain available for additional building.
Victory Park’s investors, developers and major stakeholders in the project celebrated the district’s hardfought success this week.
“Lothar had the strength and conviction to stick it out,” said Estein USA chief operating officer Lance Fair. “This is really a big day for Victory Park.”
Estein — who came in from his home in Florida for the event — said that in most cases he is a passive investor, letting its developer partners take the main stage.
But in Dallas, he had to take a handson approach to restructuring the highprofile project gone bad. “I’m proud of what we have accomplished,” he said.
Victory Park’s original bank lenders at Wells Fargo have been paid off, Estein said. And all of his individual investors stayed with the project.
“Not a single time has an investor lost a dime,” he said.
He said that Estein USA rarely keeps a property longer than 10 years, as it has with Victory. And Estein doesn’t rule out an eventual sale.
“At some point and time, we will sell,” he said. “We want to try to maximize our success.”