CORRECTION 8/29/24, 9:34 am
A suburban Dallas apartment complex avoided becoming the latest casualty of the pandemic-era syndicator sweepstakes as high interest rates continue to topple loans.
Vancouver-based Western Wealth Capital, a large multifamily investor with some syndicated deals in the United States, was accused of defaulting on $29.5 million in loans by Voya Investment Management for a 288-unit apartment complex.
The property, at 5118 Broadway Boulevard in Garland, was scheduled for foreclosure on Sept. 3, according to Roddy’s Foreclosure Listing Service. The Real Deal did not contact Western Wealth before publication, but subsequently learned from the company’s attorney that the parties were already in workout negotiations, and that after the foreclosure notice, they landed on a resolution.
Western Wealth bought the complex, called The Broadway, in 2021 with plans to update the units’ interiors, boost rents and sell it for a profit. But the costs ballooned — one filing from a local home repair company requested a lien for over $2,600 in unpaid bills for paint and resurfacing at the property earlier this month.
Voya did not respond to requests for comment.
A website for The Broadway, built in 1982, is advertising concessions of up to $1,000 upon lease signing. Monthly rents are listed from $800 to $1,700. Its occupancy rate couldn’t be determined.
Western Wealth sold another apartment property, called District 2308, at 2308 Fair Oaks Drive in Arlington, for a loss in January. Buyer Lion Real Estate Group plans to renovate the property’s outdated units.
Western Wealth also owned the Heather Ridge Apartments at 4030 Esters Road Irving, which it bought in 2021. But that was a bust that wiped out all investor cash. The Heather Ridge property had a 70 percent loan-to-value ratio, according to Bloomberg, that sank investors’ equity after increased costs and serious property devaluation.
Similar stories have played out for the past year as the effects of the Federal Reserve’s raising the cost of borrowing in 2022 began taking a toll. About 40 percent of commercial real estate collateralized loan obligations — many of which originated in 2021 — were added to servicers’ watchlists in April, reaching a record 8.6 percent distressed, according to CRED iQ data, .
Western Wealth Capital is just one of many major syndicators pursuing value-add apartment plays in the Dallas area. Many upstart landlords didn’t account for just how steep interest rate hikes could get after the mid-pandemic multifamily boom.
Correction: The Real Deal did not contact Western Wealth prior to publication of this story. After publication, an attorney for Western Wealth said the parties had negotiated a full resolution, terminating the scheduled foreclosure sale. This story has been updated to reflect that. It also referred to Western Wealth as an “upstart landlord,” wording which has been changed because the company was founded in 2014.
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