Texas’ multifamily real estate sector is facing growing financial challenges, according to experts who spoke at a recent Connect CRE conference. Panelists highlighted that $19 billion in commercial mortgage-backed securities (CMBS) loans tied to Texas multifamily properties are set to mature over the next five years.
CWCapital’s James Shevlin described the situation simply: “It’s trouble.”
Data shows that more than $700 million in commercial real estate (CRE) loans in Texas’ largest counties were flagged for foreclosure this month, an increase from about $400 million in July. Many of these properties are older apartment complexes with loans originated in 2022. Industry observers say that many operators purchased these assets using floating-rate debt when borrowing costs were low, planning to renovate and raise rents before selling at a profit. However, rising interest rates have increased their debt service costs before they could implement those plans.
Harris County, which includes Houston, has been especially affected. At the September foreclosure sale, 10 properties representing nearly $350 million in debt faced foreclosure. This figure includes some properties carried over from last month when operator Fercan Kalkan had 3,000 units targeted for default.
The Dallas Federal Reserve’s latest Beige Book report reflects a “cautious” outlook for commercial real estate in the region and notes “scattered reports of distressed property sales.” The report also indicates slow activity in both construction and investment sales.
Elsewhere in Texas real estate news this week:
On CNBC’s Squawk Box, Bill Pulte of the Federal Housing Financing Agency declined to comment on mortgage fraud allegations involving Texas Attorney General Ken Paxton or similar accusations concerning Federal Reserve Governor Lisa Cook.
Land Tejas co-founder and CEO Al Brende died at age 80. Since its founding in 1997, Land Tejas has developed more than 20 communities across 15,000 acres around Houston. Its Sunterra development ranked fourth among top-selling master-planned communities nationwide in 2024.
In Austin’s buyers market for single-family homes, a newly built house at 1001 Bluebonnet Land was listed for $3.25 million on May 8 but was relisted at $3.4 million after being removed from MLS on August 14. Benjamin Goudy of Texas Crossway Realty holds the listing.
