More details are beginning to emerge about the recent fire sale of the tallest building in Fort Worth.
Last month, The Dallas Express reported that Pinnacle Bank Texas purchased Burnett Plaza at 801 Cherry St. during a Tarrant County courthouse auction. The 567-foot tower was acquired for $12.3 million, far lower than its $104.5 million appraised value and a fraction of the $137.5 million price tag paid by the underwater owner, Burnett Cherry Street LLC.
Pinnacle obtained the discounted building after Burnett could not cover debt payments on the loan it used to finance the tower’s purchase. Now, new details are coming to light that paint a picture of fraud accusations and a sale that is far from finalized.
Leading up to the May sale, Burnett Cherry Street LLC, an entity with connections to Opal Holdings, was already in financial trouble, with lawsuits and liens initiated by contractors who claimed they had not been paid. For their part, however, Burnett and Opal contended in an April 2 lawsuit that its loan was driven into default, at least in part, by Pinnacle since it claimed the bank had not released payments owed to contractors.
Later that month, Pinnacle countersued, stating that Opal, through Burnett, had not adhered to the loan conditions, prompting foreclosure proceedings. Pinnacle alleged, for example, that Opal failed to maintain an adequate debt ratio, implying it had too much debt relative to its assets.
On May 7, the bank foreclosed on its $13 million loan to Burnett Cherry Street, eventually winning the foreclosure auction with a $12.3 million credit bid. However, an LLC tied to Opal used a $69.9 million loan, also from Pinnacle, when purchasing Burnett Plaza in 2021.
Yet another entity, Burnett Plaza Holdings LLC, is also entangled. The entity has $86 million in ground lease loans showing Kansas City, Missouri-based UMB Bank as trustee. According to Pinnacle, Burnette Plaza Holdings is affiliated with Burnett Cherry Street. The bank claimed in court documents that Shaya Prager, a founding member of Opal, was involved in a “string-along fraud” by distorting the relationship between his company and the LLCs.
Opal fired back in legal filings, calling the claims “grotesque and harmful,” per the Dallas Business Journal. In fact, Opal, Burnett Cherry Street, and Prager’s legal representation, Israel Dahan, a partner at King & Spalding, say Opal does not own the tower and has never owned it. Instead, he says Burnett Plaza Holdings LLC does.
Despite the many claims, Pinnacle’s foreclosure on the $13 million loan means they control the building. The bank also possesses the tower’s first mortgage and important distinction, says Evan Stone, managing partner at Goodwin Advisors.
“It’s not an uncommon situation… Other lenders are foreclosing on their mezzanine position. They don’t always have a first mortgage to themselves, said Stone.