Texas is experiencing a significant increase in commercial real estate (CRE) distress as the year ends, with lenders moving to sell troubled properties before 2026. The value of Texas CRE loans scheduled for each monthly foreclosure sale has been around $600 million in recent months, but December’s total has surged to over $900 million, according to Roddy’s Foreclosure Listing Service.
Of the $911 million in loans set for auction this month, $659 million are linked to multifamily properties. Several loans previously flagged for foreclosure but not sold earlier in the year are returning to the auction block. This includes Charles Cohen’s design center at 5120 Woodway Drive, which was initially slated for auction in June and July.
Harris County, which includes Houston, remains the most affected area with 11 loans totaling more than $250 million. Other regions within the Texas Triangle are also seeing increased distress: Bexar County (San Antonio) faces nearly $180 million in foreclosures, while Travis County (Austin) is close behind with $168 million worth of allegedly defaulted loans.
Among the notable cases:
In Houston, Fannie Mae has filed a lawsuit against Jon Venetos’ Lurin Capital over an alleged default on a $77.2 million loan secured by Latitude 2976, a 734-unit apartment complex at 201 and 301 Wilcrest Drive. Unlike many multifamily investors struggling with floating-rate debt, Venetos’ loan had a fixed rate of 5.1 percent. Fannie Mae aims to take control of the property at this month’s foreclosure auction.
In Austin, Ari Rastegar may lose four apartment complexes tied to a $22.7 million loan from Greystone: Hyde Park Square (48 units), Sunset Palms (36 units), The Chateau (30 units), and The Highlander (49 units). Rastegar stated that the foreclosure resulted from “a knock-down, drag-out fight with the lender,” adding that he intends to continue legal action even if he loses these properties and that they represent only a small part of his portfolio.
In San Antonio, Lynd Living received a foreclosure notice for Copper Mill Apartments but subsequently modified its loan on the 344-unit complex days later—canceling the sale after borrowing $34.3 million as part of a collateralized loan obligation issued by Franklin BSP Realty Trust.
Dallas County’s largest new flagged loan is tied to Tesoro at 12 Apartments—a $24.2 million mortgage on a 184-unit complex at 4271 Altoona Drive—provided by Arbor and involving investors Ce Shi, Matthew Picheny and Stephen Lee-Thomas.
Fort Worth sees Tides Equities potentially losing another property after allegedly defaulting on a $32.8 million loan backed by Tides at Westcreek—a 272-unit apartment complex at 6776 Westcreek Drive—part of another Franklin BSP Realty Trust collateralized obligation. Tides partnered with Pecos Housing Finance Corporation using what is known as a “traveling” housing finance corporation loophole; Governor Greg Abbott signed legislation closing this cost-cutting method for syndicators and investors.
In Denton, Jordan Multifamily could lose five student housing communities connected to a $55.5 million Argentic Real Estate Finance loan covering properties built between 1962 and 1975.
Some properties have faced repeated foreclosure attempts due either to ongoing litigation or attempted modifications:
– Langdon at Walnut Park in Austin ($60M)
– One Technology Center in San Antonio & Three Forest Drive in Dallas ($57.75M)
– Arioso Apartments & Townhomes in Fort Worth ($56M)
– Mia Riverside in Austin ($50.2M)
– Decorative Center of Houston ($50M)
– Aviator at Brooks in San Antonio ($33.9M)
– Galleria Oaks Building 2 retail strip in Austin ($16M)
Other assets include retail buildings and development sites across several counties.
The Copper Mill Apartments’ scheduled foreclosure was canceled following an agreement between Lynd Living and Benefit Street Partners extending their loan terms.
