Falls Apartment Group Gets Help Stabilizing Portfolio

Falls Apartment Group is getting help stabilizing its 3,600-unit Houston multifamily portfolio after owner Rao Polavarapu filed for bankruptcy in November.

One of Houston-based Falls’ lenders tapped ThirdEye Partners to help stabilize the operator’s distressed properties, according to a press release from ThirdEye Partners. As part of the process, Lynd Management Group is taking over operations of the Houston portfolio. Falls currently still owns the 10 properties.

ThirdEye, which is based in Houston, is carving out a niche for itself as a third-party operator that helps lenders and borrowers stabilize distressed properties.

“By the time you get to this point, nobody trusts anybody, and the fact sets are lies,” Lynd Living CEO David Lynd said.

Four of the 10 properties are in Chapter 11 bankruptcy proceedings. For those properties, San Antonio-based Lynd can provide debtor-in-possession financing, according to the release. For the other six properties, Lynd and ThirdEye are working with lenders and stakeholders on loan workout strategies.

Falls owner Polavarapu has faced foreclosures on his multifamily portfolio since 2024, when he allegedly defaulted on a $33.5 million loan tied to the 468-unit Falls of Las Villas and the 514-unit Falls of Alta Vista, according to Roddy’s Foreclosure Listing Service.

In July, nearly $90 million in commercial mortgage-backed securities loans were flagged for special servicing. The $25 million loan tied to the Falls of Deer Park Apartments was transferred after allegedly being delinquent for 60 days. Similarly, a $64.5 million loan was transferred for “imminent monetary default.”

That loan is backed by Falls of Braeburn Apartments at 9707 Braeburn Glen Boulevard; Falls of Chelsea Lane Apartments at 8039 Boone Road; and Miami Gardens Apartments at 9540 Kempwood Drive, according to loan documents.

Facing foreclosure on the properties, Polavarapu filed for bankruptcy in November to stop the sales, according to special servicer commentary on Morningstar Credit.

Polavarapu was also hit with a lawsuit in December claiming he personally guaranteed a $29 million CMBS loan originated by Wells Fargo and owes the lender $30.1 million. The loan is backed by Falls at Westpark, a 352-unit apartment complex at 6130 Southwest Freeway in Houston. Polavarapu filed for Chapter 11 bankruptcy the day before the property was scheduled to be sold at a foreclosure auction, Computershare claims in the suit filed Dec. 23 in New York Supreme Court.