Texas is seeing a significant increase in distressed commercial real estate (CRE) debt as the year ends, with lenders moving to sell troubled properties before 2026. According to Roddy’s Foreclosure Listing Service, the value of Texas CRE loans scheduled for each monthly foreclosure sale had remained around $600 million for several months. In December, this figure rose sharply to over $900 million.
Of the $911 million in loans set for auction, $659 million are linked to multifamily properties. Several loans that were previously flagged but not sold earlier in the year are also returning to the auction block. One example is Charles Cohen’s design center at 5120 Woodway Drive, which was originally slated for auction in June and July.
Harris County, which includes Houston, continues to be most affected by these foreclosures, with 11 loans totaling more than $250 million. Other regions within the Texas Triangle are also experiencing high levels of distress. Bexar County (San Antonio) has nearly $180 million worth of loans facing foreclosure, while Travis County (Austin) has about $168 million in allegedly defaulted loans.
Among notable cases in Houston, Fannie Mae has filed a lawsuit against Jon Venetos’ Lurin Capital regarding a default on a $77.2 million loan tied to Latitude 2976, a 734-unit apartment complex at 201 and 301 Wilcrest Drive. The loan had a fixed rate of 5.1 percent rather than an unpredictable floating rate often blamed for similar defaults. Fannie Mae is seeking control of the property through this month’s foreclosure auction.
In Austin, Ari Rastegar may lose four apartment complexes at the December sale due to a $22.7 million loan from Greystone covering Hyde Park Square (48 units), Sunset Palms (36 units), The Chateau (30 units), and The Highlander (49 units). “The foreclosure is the result of a ‘knock-down, drag-out fight with the lender,’” Rastegar said, adding he intends to continue litigation even if he loses ownership and noting these assets represent only a small portion of his portfolio.
Lynd Living received notice of foreclosure for Copper Mill Apartments in San Antonio but managed to modify its loan shortly after receiving notice; thus, that particular sale was canceled.
In Dallas County, one major new case involves Tesoro at 12 Apartments—a 184-unit complex at 4271 Altoona Drive—tied to a $24.2 million mortgage provided by Arbor and associated with investors Ce Shi, Matthew Picheny and Stephen Lee-Thomas.
Fort Worth-based Tides Equities faces another possible forced sale involving Tides at Westcreek after allegedly defaulting on a $32.8 million loan issued by Franklin BSP Realty Trust as part of a collateralized loan obligation. Tides partnered with Pecos Housing Finance Corporation using what is known as a “traveling” housing finance corporation loophole—a method recently closed by legislation signed by Governor Greg Abbott—to secure property tax breaks.
Frisco-based Jordan Multifamily could lose five student housing communities in Denton tied to a $55.5 million loan from Argentic Real Estate Finance covering properties built between 1962 and 1975.
Thirteen properties up for auction have been flagged multiple times before due either to ongoing litigation or attempts at modifying their respective loans.
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