Real estate firm Dilweg hands First Citizens Bank Plaza back to lender after WeWork defaults on lease

Commercial real estate firm The Dilweg Cos. has released an aging office tower in uptown Charlotte back to its lender.

Anthony Dilweg, CEO and founder, told the Charlotte Business Journal that the Durham-based firm handed First Citizens Bank Plaza, at 128 S. Tryon St., over to the lender on April 14. The company tried to restructure its financing tied to the property but couldn't come to terms with the lender, Dornin Investment Group, he said.

"We were looking to infuse about $30 million back into that (property), but we had to restructure the debt and the value and build it back up," he said. "We didn’t come to terms. It wasn’t something that was of strong interest to (the lender)."

Dilweg purchased the 23-story, 476,393-square-foot building in 2017 for $79 million, according to previous CBJ reporting. About $120 million is owed on the loan, Dilweg said.

The tower took a hit to its occupancy earlier this year, after New York-based coworking and flex workspace company WeWork defaulted on its lease. Dilweg said negotiations between his firm and WeWork were unsuccessful and that the tenant vacated its space in March.

WeWork moved into seven floors at First Citizens in 2019. It has two other Charlotte locations in the Regions 615 building, at 615 College St., and The RailYard South End, at 1422 S. Tryon St. The company announced in November that it would be closing at least 40 underperforming locations across the country.

The tower is now about 42% occupied, according to CoStar data. Other tenants include First Citizens Bank, architecture and design firm Perkins + Will, logistics company Spot and MOA Korean BBQ.

The CRE firm gave another of its buildings, Regency Lakeview in Cary, back to the lender in November, according to the Triangle Business Journal.

Dilweg said he expects this to become a common theme across the commercial real estate industry as the office market continues to struggle.

"We see the current reality. This is going to be very challenging," he said. "We know there are some losers, and we know there will be some winners ... So, it’s important (to have transparency) for our lenders and for our investors."