Restructuring Firm Engaged For Partially Bankrupt 10-Property Multifamily Portfolio
A lender-appointed advisory firm is evaluating a financially distressed 3,633-unit multifamily portfolio owned by Falls Management Group, a troubled Houston-based investor.
ThirdEye Partners, a firm focused on distressed multifamily assets and lender-led workout strategies, was retained by one of several lenders tied to the 10-property portfolio, which includes four properties in bankruptcy.
The firm will provide independent due diligence and advisory services, according to a press release.
Falls Management Group has faced substantial multifamily distress in recent years, including foreclosures and special servicing. Rao Polavarapu established the company through an acquisition in 1997, and it eventually grew its assets to 21 properties and 7,180 units, according to the company website.
Falls Management Group did not immediately respond to Bisnow’s request for comment.
The investor was threatened with foreclosure on two Pasadena properties, Falls of Las Villas and Falls of Alta Vista, for about a year before it went through.
The lender, Owemanco Mortgage Holding Corp., filed for properties to appear at foreclosure auctions starting in 2024, citing Falls Management Group’s default on a $33.5M loan issued in January 2022. Owemanco took ownership last year through foreclosure on Sept. 24, according to Harris County records.
Another four Houston-area Falls-owned properties backed by two CMBS loans totaling $89.5M were performing as expected but still faced financial distress in July, when the loans were transferred to special servicing, The Real Deal reported. Those properties were Falls of Deer Park, Falls of Braeburn, Falls of Chelsea Lane and Miami Gardens Apartments.
ThirdEye Partners did not provide details of the 10 properties in the portfolio it was retained for, though a spokesperson confirmed it includes Falls of Edgebrook and Falls of Parramatta.
Four of the portfolio's properties are operating under Chapter 11 bankruptcy proceedings.
Along with advisory services and due diligence, ThirdEye Partners will evaluate the financial performance, operational execution and physical condition of the portfolio.
The scope of work includes reviews of rent rolls and lease files, deferred maintenance, and capital needs assessments. ThirdEye Partners aims to provide the lenders and borrowers with a data-driven foundation for restructuring and workout planning, per the release.
Falls Management Group transferred the portfolio's operations to Lynd Management Group, a multifamily operator with experience in distressed asset turnarounds and lender-led workouts.
ThirdEye Partners and Lynd will jointly work with lenders and stakeholders on a workout strategy for the six nonbankruptcy assets. Lynd intends to deploy rescue equity capital and is evaluating potential joint venture or cosponsorship structures with the borrower.
For the four bankruptcy assets, Lynd can provide debtor-in-possession financing and, subject to lender direction and court process, serve as a stalking horse bidder or purchaser.
