A $110 million CMBS loan backed by a pair of Austin apartment complexes has been flagged for special servicing.
The loan tied to Orbit Apartments and Starburst Apartments, both in far northeast Austin, has been delinquent since April and was transferred to special servicing for default, according to Trepp. The loan, which was issued in 2023, is set to mature in May 2028.
Deed records show the borrower is Orem, Utah-based investor Keller Capital. The special servicer told Trepp it’s working with Keller Capital to come to a resolution.
Morningstar reported that cashflow at the properties last year dropped 16 percent from when the loan was issued the year before. Morningstar attributed the decrease to “a combination of weak revenue and increased expenses.”
There are 840 units between the two properties, at 8800 and 8900 North Interstate Highway 35. The loan works out to about $131,000 per unit. The apartments were built in the early eighties and renovated in 2022. Orbit Apartments were valued at $43.7 million this year, appraisal district records show. Starburst Apartments were valued at $58.1 million.
Keller Capital bought the properties in 2019 from Tampa-based investor Laurel Ridge, according to the deeds.
The city of Austin has been hit particularly hard by the historic deluge of supply that’s hit the market over the last few years.
Austin saw 25,000 units delivered last year, according to data from Yardi Matrix. As a result, rents continued to freefall and occupancy slumped. MRI ApartmentData put the city’s occupancy at 84.5 percent in April. That same month, rent had dropped 7.6 percent from a year earlier.
Industry experts point to the sharp decrease in projected supply for this year and next as reasons to be hopeful that rent growth will stabilize in the overbuilt market.