A distressed multifamily investor that once self-identified as “inexperienced and unfamiliar” with multifamily commercial real estate is in trouble with another Houston asset.
A $38 million loan backed by La Solera Apartments, owned by New York-based Nord Group, was sent to special servicing in February, Morningstar Credit reported.
Cashflow at La Solera in 2023 was down 36 percent from when the loan was issued in 2022, Morningstar said. The property’s occupancy dipped from 94 percent at the end of 2022 to 88 percent last June.
Nord Group bought the garden-style multifamily property, at 10300 Wilcrest Drive, in 2021. It was built in 1979 and is located in the southwest Houston suburb of Alief, about 16 miles from downtown. The property’s taxable value was set at $32.4 million million last year, appraisal district records show.
Nord Group was founded in 2018 and said it got swept up in the multifamily bubble of the pandemic that burst when interest rates surged and valuations plunged.
Two principals at Nord Group, Khaled Noor and Baruch Teitelbaum, were majority interest holders in three ownership LLCs that filed for Chapter 11 bankruptcy protection late last year, Bisnow reported in December.
The LLCs owned three Houston apartment complexes totaling 618 units: The Avenue, a 215-unit property at 5050 Yale Street; Toro Place, a 320-unit property at 12101 Fondren Road; and Miramar Townhomes, a 48-unit property at 2380 Bering Drive.
The debtors blamed their Houston-based management company Better World Properties for botching renovations.
They also said in the filing that they were “inexperienced and unfamiliar” with multifamily commercial real estate.
Houston’s multifamily market has absorbed a glut of deliveries in the last three years, driving occupancy and rental rates down. The numbers were stabilizing heading into this year — with occupancy at 88.6 at the end of last year, up slightly from its position at the end of 2023, 88.5 percent — but some inexperienced operators like Nord Group have struggled to survive the cycle.
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