Dive Brief:

• A 264-unit Houston-area property recently owned by Austin, Texas-based GVA Real Estate Group is slated to be auctioned on Dec. 5, according to Bisnow and Harris County, Texas, public records.
• Five Delaware-registered LLCs originally borrowed $288.6 million from Greenwich, Connecticut-based LoanCore Capital Credit REIT for The Retreat at Stafford. The entities are also tied to apartment complexes in Richardson and Lewisville, Texas; Hendersonville, Tennessee; and Greenville, South Carolina, according to Bisnow. GVA owns all five complexes.
• The garden-style Retreat at Stafford offers rents ranging from $1,049 to $1,999 and one-, two- and three-bedroom units ranging in size from 752 to 1,508 square feet, according to its Apartments.com listing. 

Dive Insight:

GVA Real Estate Group, which did not respond to Multifamily Dive’s request for comment, says on its website that its strategy is to “find opportunities that can yield above-market cash flow once stabilized while generating capital appreciation in the short and long term.”

GVA has more than 30,000 units and its own property management team. The Retreat at Stafford would seem to fit nicely into its investment strategy. Built in 2006, it has recently upgraded apartments, according to its Apartments.com listing. The advertisement says the property boasts “designer finishes, an entertainment bar, custom vanities, an included washer and dryer and the luxury of a private patio or balcony.”

With these features, The Retreat at Stafford differs from some of the other apartment communities that have run into trouble in Houston this year.

In April, Arbor Realty Trust foreclosed on four Houston apartment properties totaling 3,200 units after Dallas-based Applesway Investment Group defaulted on nearly $230 million. The apartments allegedly had issues stemming from owner neglect, including roaches, rats and overflowing trash at the Timber Ridge Apartments, according to the Houston Chronicle. The situation got so bad that Houston Mayor Sylvester Turner visited the complex.

In addition, The Landings at Northpoint, a 292-unit complex in the Greenpoint neighborhood, was sold at a foreclosure auction on Oct. 3, according to Bisnow. Also, in October, MF1 Capital foreclosed on a 282-unit complex in Houston after making a $49.9 million bid for the property. The previous owner, Houston-based Rockstar Capital, defaulted on a $51 million loan tied to the property, according to The Real Deal.

While the number of distressed apartment deals is growing in Houston, many of the properties under pressure aren’t ones that institutional buyers would be interested in. 

“The deals that are blowing up today — and there are plenty of deals blowing up today — are really C-minus transactions that were over-leveraged,” said Ric Campo, CEO of Camden Property Trust, on the REIT’s second-quarter earnings call.

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