COURT: CROWS IN DEFAULT TO DALLAS MARKET LENDERS

Byline: Rusty Williamson

DALLAS--The lenders threatening foreclosure of the Dallas Market Center won some points late Tuesday.
That's when State District Judge Michael O'Neill signed a summary judgment ruling that the Trammell Crow family, owners of the DMC, are in technical default on payments due in 1994 on the 125-acre complex that includes the International Apparel Mart, Menswear Mart and four other buildings. The ruling is ammunition in the arsenal of lenders The Equitable Life Assurance Society of the U.S. and Dai-ichi Life USA in their bid to gain ownership of the DMC.
"This action moves us closer to where we want to be, and that is in a position to foreclose on the property, if necessary," said Jonathan Miller, senior vice president of Equitable Real Estate in New York. The lenders have contended since last fall that the Crows were in default on mortgage payments due for the last six months of 1993.
Last October, the lenders posted notice that they might foreclose on the DMC if agreement was not reached on restructuring the $450 million mortgage to Trammell Crow Interests. In November, the Crows moved to block seizure, and in December, O'Neill ruled in the Crows' favor, granting a temporary injunction to block foreclosure proceedings, citing the fiduciary relationship between the parties. O'Neill ordered the Crows, though, to post a $3.25 million equity bond to maintain control of the DMC.
The new ruling doesn't void the December injunction but affords Equitable and Dai-ichi more leverage in talks to hammer out a settlement. Both the lenders and the Crows have expressed a desire to settle out of court in advance of the scheduled June 5 start of a jury trial.
The Crows have argued that Equitable's consent in 1992 to tenant concessions at the DMC, including rent reductions, affected its obligation to pay a $4.4 million interest payment due March 31, 1993. The concessions came about after a tenant group threatened to vacate the International Apparel Mart.
A DMC spokesman said Tuesday's ruling has no affect on day-to-day operations. He added that the lenders were involved in hiring the current DMC management team, and there's a tacit understanding that it would remain in place should the lenders foreclose.

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