Five student housing properties in Denton, Texas, owned by Jordan Multifamily, are set to go to foreclosure auction in December. The Dallas-area firm is alleged to have defaulted on a $55.5 million loan from Argentic Real Estate Finance, according to Roddy’s Foreclosure Listing Service. The affected properties were built between 1962 and 1975 and serve as off-campus housing for students at the University of North Texas.
Unless Jordan Multifamily and Argentic reach an agreement before the scheduled sale, the five properties will be auctioned on December 2 at 10 a.m. at the Denton County Courthouse. The portfolio includes 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. In total, there are 405 units involved in the potential foreclosure.
Jordan Multifamily acquired these properties in 2022. The outstanding loan amounts to about $137,037 per unit.
The company focuses on acquiring older apartment complexes, renovating them, increasing rents, and then selling them for profit—a strategy known as value-add investing. However, this approach has become less viable recently due to rising interest rates and higher construction costs. Many operators bought aging properties when borrowing was cheaper and values were high; now with increased debt service on floating-rate loans and more expensive renovations, financial pressures have mounted.
Additionally, major cities across Texas have seen a surge of new apartment developments come onto the market. This has led to lower rental rates and occupancy levels as supply outpaces demand.
These factors have resulted in significant distress among value-add multifamily operators across Texas. According to industry experts like CWCapital’s James Shevlin—who spoke recently at a Texas multifamily conference hosted by Connect CRE—most commercial debt facing foreclosure each month comes from this sector. Looking ahead, Shevlin noted that $19 billion in CMBS loans tied to Texas multifamily assets will mature over the next five years.
Further details about the volume of commercial real estate debt headed for auction can be found here. Experts also anticipate continued distress in the state’s multifamily market; more information is available here.
