Houston’s multifamily market is showing signs of deepening distress.
Twelve multifamily properties with $340 million in loans were scheduled to appear at the Harris County foreclosure auction this week, marking an increase from only a few properties filed last month, Bisnow reported.
Two properties owned by Falls Apartment Group — the 468-unit Falls of Las Villas and its 514-unit Falls of Alta Vista — were among those scheduled for November’s action.
Fewer than half of those on the calendar were likely to be auctioned, said Terri Clifton, president of Better World Properties. About a third are likely to reach the auction block, as most of the lenders are likely to negotiate new terms or extensions to prevent outright foreclosure, she said.
“You’re starting to see the lenders that are to the point where they’ve tried to work with the individuals that have gotten themselves in trouble, and they’re taking it to foreclosure with the possibility that they’ll come up with something,” Clifton said.
Houston placed fifth nationally for commercial foreclosure starts in the third quarter, with 1,791 filings recorded by Attom Data Solutions. Rising interest rates and a tightening financial market limited lenders’ and borrowers’ options for refinancing or debt restructuring.
“Extending and pretending” no longer seemed viable for many, said Cole Kellogg of FCP, who is vice president of multifamily acquisitions
Overvaluation during low-interest years contributed to the market’s current conditions. Multifamily properties have dropped about 20 percent in value, creating a gap between what properties are worth and their loan amounts, Clifton said.
Lenders sometimes file for foreclosure as leverage for further negotiation without an immediate intent to seize the property.
Behind the scenes, some lenders are quietly pursuing deals to pass existing loans to buyers of struggling properties, sidestepping the expenses tied to foreclosure.
“Sometimes that lender would love for one of these key players to take over and take the loan over,” Clifton said. However, many deals still fall through as potential buyers assess financial risks.
Below is a list of multifamily properties that were scheduled for foreclosure action this week:
Village at Piney Point
- Loan Size: $74 million
- Note Holder: Fannie Mae
- Borrower: Piney Point 2023
- Address: 2601 Lazy Hollow Drive
- Date Borrowed: June 6, 2023
The Palms on Westheimer
- Loan Size: $54.6 million
- Lender: DLP Lending Fund LLC
- Borrower: Westheimer 2021
- Address: 6425 Westheimer Road
- Date Borrowed: Dec. 27, 2021
Pecan Square Village
- Loan Size: $38.7 million
- Lender: DLP Lending Fund LLC
- Borrower: Pecan2020
- Address: 14531 Ella Boulevard
- Date Borrowed: March 20, 2023
Pine Lake Village
- Loan Size: $10.6 million
- Lender: Lument REO LLC
- Borrower: Pine Lake Property
- Address: 1325 Greens Parkway
- Date Borrowed: April 29, 2022
Ridge Point
- Loan Size: $18.8 million
- Lender: Lument REO LLC
- Borrower: Ridgepoint Apts Holdings
- Address: 2700 Westridge Street
- Date Borrowed: April 29, 2022
Green Tree Place Apartments
- Loan Size: $20.1 million
- Lender: Lument REO LLC
- Borrower: Green Tree Place Holdings
- Address: 700 Dunson Glen Drive
- Date Borrowed: April 29, 2022
Falls of Las Villas and Falls of Alta Vista
- Loan Size: $33.5 million
- Lender: Owemanco Mortgage Holding Corp. and TIG Romspen US Master Mortgage LP
- Borrower: Falls of Las Villas and Falls of Alta Vista
- Address: 407 South Richey Street. and 621 Richey Street, Pasadena
- Date Borrowed: Jan. 27, 2022
Reserve at 63 Sixty Three
- Loan Size: $37.3 million
- Lender: Reserve 63 LLC
- Original Lender: Capital One
- Borrower: 6363 Partners DE
- Address: 6363 West Airport Boulevard
- Date Borrowed: April 5, 2022
Park North
- Loan Size: $56.3 million
- Lender: Arbor Realty Trust
- Borrower: A group of LLCs with ties to Inman Equities
- Address: 16112 North Freeway
- Date Borrowed: May 3, 2022
Sutter Ranch
- Loan Size: $18.2 million
- Lender: Berkeley Point Capital LLC
- Borrower: Sutter Ranch Holdings
- Address: 10445 Greens Crossing Boulevard
- Date Borrowed: April 1, 2021
The Vintage
- Loan Size: $24.7 million
- Original Lender: CBRE Capital Markets
- Borrower: Next Vintage Park
- Address: 6500 W. 43rd Street
- Date Borrowed: Sept. 10, 2020
— Andrew Terrell
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