Foreclosure Looms for Houston Multifamily Investor

A local multifamily investor could lose two multifamily properties in a suburb of Houston to foreclosure at next month’s auction.

Falls Apartment Group allegedly defaulted on $33.5 million in debt for the 468-unit Falls of Las Villas and the 514-unit Falls of Alta Vista, according to Roddy’s Foreclosure Listing Service. The debt equates to $34,100 per unit.

The owner purchased the properties in 2017 and appears to have refinanced the mortgages with a 2022 loan from Toronto-based Ontario Wealth Management Corporation and TIG Romspen US Master Mortgage, which is based in the Cayman Islands, deed records show.

The properties are scheduled to be auctioned at the Harris County Courthouse foreclosure sale on Nov. 5.

Falls of Las Villas, at 407 Richey Street, was built in 1970 and remodeled in 2017. Appraisal district data shows it is valued for property taxes at $30.6 million. Falls of Alta Vista, at 621 Richey Street, was built in 1970 and remodeled in 2022. The appraisal district valued it at $33 million.

The properties are located in Pasadena, about 15 miles southeast of downtown Houston. Units rent for $830 to $1,425 per month, according to online listings.

The latest interest rate cut provided hope for some commercial property owners on the brink of distress, but Houston continues to struggle with a high foreclosure rate.

Nationwide foreclosure activity dipped slightly in the third quarter, but Houston still ranked as one of the cities with the most foreclosure starts, according to ATTOM Data Solutions.

Houston ranks fifth (behind New York, Chicago, Los Angeles and Miami) with 1,791 foreclosure starts. Last month, $260 million in commercial real estate loans faced foreclosure in Harris County, including four multifamily properties.

Falls Apartment Group was founded by Rao Polavarapu. It operates 21 multifamily properties in Houston, according to its website. The firm focuses on value-add multifamily properties.