The industry maxim “survive until ’25” is proving to be a pipedream as foreclosures ravage commercial real estate in Texas.
More than half a billion dollars worth of commercial real estate loans in Texas are headed to foreclosure auction on June 3, according to Roddy’s Foreclosure Listing Service.
Most are multifamily loans issued between 2021 and 2023, when investors swept through Texas picking up value-add apartments complexes with plans to revamp and sell them for a profit. Instead, interest rates ballooned and values sank.
Harris County, home to Houston, is the hardest hit, with nine properties totaling $267 million in debt facing foreclosure.
Here are the biggest loans up for auction this month. It’s possible that some of these borrowers and lenders reach agreements to avoid auction.
Dallas
Thanks to yet another loan modification, the property that would have represented Dallas’ largest loan up for auction was saved at the last minute. Brookfield worked out the $160 million loan backed by Town East Mall in Mesquite with lender U.S. Bank NA to avoid foreclosure. It’s the loan’s fourth modification, Morningstar Credit reported.
The second-largest loan on the chopping block is tied to a property in the Dallas suburb of Carrollton, which is located in Denton County. Benefit Street Partners claims Dallas-based investor Noel Management defaulted on a $59.8 million loan tied to the 268-unit Avenues at Carrollton, at 4689 Mustang Parkway. The debt amounts to $223,000 per unit. Benefit Street is taking a different approach to offloading this distressed property by looking for a buyer on LinkedIn.
Fort Worth
Dallas-based CR Holdings purchased Mylo Apartment Homes, at 6500 Hulen Bend Boulevard, with a $29.8 million mortgage from a Bridge Debt Strategies fund in 2021. The 325-unit apartment complex was built in 1985, and the debt amounts to $91,700 per unit.
Austin
Two large commercial properties are facing foreclosure in Travis County this month: Azure Apartments & Townhomes and Villas at Mueller.
An entity based in Frisco called Grow Wealth 2 Retire purchased Azure Apartments, at 1212 Westheimer, in 2022 with a $27 million loan from Philadelphia-based lender Cohen & Co. The 199-unit property was built in 1976. The debt amounts to $135,700 per unit.
The 126-unit Villas at Mueller, at 6103 Manor Road, was bought in 2023 by Zion Capital, which is based in Austin and opened in 2021. LaSalle Debt Investors provided a $13.5 million loan for the purchase, which amounts to $107,000 per unit.
Houston
The property with the largest loan headed to auction in Harris County is the $76.8 million CMBS loan backed by the Houston Marriott Westchase, at 2900 Briarpark Drive. The 604-key hotel is owned by New York-based Triangle Capital Group. The loan, which amounts to $127,000 per key, has been delinquent since September 2020, according to Morningstar Credit. The property is valued at $37.5 million, a 70 percent drop from its valuation of $135 million when the loan was issued.
Eight other large commercial properties in Houston’s Harris County are headed to auction this week: two office buildings and six apartment buildings.
San Antonio
Wilmington Trust lent Lakewood, New Jersey-based Sun Equity $26.8 million for the purchase of Park Vista Apartments in 2021. The 477-unit property, at 5470 MIlitary Drive, was constructed in 1986. The debt amounts to $56,000 per unit.
In addition to Park Vista, there are two other multifamily properties headed to auction: SummerCreek, at 11851 Belair Drive, and Onyx at Oslo, at 6919 North Loop 1604 West.
Repeat offenders
Of the nine foreclosures in Harris County, three properties are regulars. They’ve received multiple foreclosure notices but haven’t been sold yet.
- Frost Bank Building, at 10333 Richmond Avenue ($34.7 million);
- Sutter Ranch Apartments, at 10445 Greens Crossing Boulevard ($18.2 million); and
- Reserve at 63 Sixty-Three, at 6363 Airport Boulevard ($37.3 million).