Five student housing communities owned by a Dallas-based multifamily operator are headed to foreclosure auction in December.
Jordan Multifamily, which is based in Frisco, allegedly defaulted on a $55.5 million loan from Argentic Real Estate, according to Roddy’s Foreclosure Listing Service. The loan is tied to five properties in Denton built between 1962 and 1975. They’re off-campus student housing options for students at the University of North Texas.
It’s possible that Jordan Multifamily and Argentic will come to a deal before the auction, which could cancel the sale. If they don’t, the properties will be sold at an auction on Dec. 2 at 10 a.m. at the Denton County Courthouse.
The firm could lose a 79-unit complex at 911 Bernard Street; an 80-unit complex at 707 Bernard Street; an 81-unit complex at 1607 West Live Oak Street; an 82-unit complex at 1003 Eagle Drive; and an 83-unit complex at 2424 West Oak Street.
The portfolio comprises 405 units; the loan works out to $137,037 per unit. Jordan purchased the properties in 2022.
The firm specializes in fixing up older apartment complexes, raising rents and selling them for a profit. The value-add strategy has gone bust for many operators during this economic cycle. They bought older properties when interest rates were low and property values were high. When interest rates skyrocketed, debt service on floating-rate loans ballooned, and construction costs also increased.
At the same time, major Texas metros saw a historic flood of apartment developments come online, which put downward pressure on rental rates and occupancy levels.
As a result, value-add multifamily operators have faced a lot of distress, making up most of the commercial debt headed to foreclosure each month.
Experts say there’s more around the corner. In the next five years, $19 billion in CMBS loans tied to Texas multifamily will mature, CWCapital’s James Shevlin said at a recent Texas multifamily conference hosted by Connect CRE.
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