An 881-unit apartment complex in the Greenspoint area saw its value slashed by 56% and faces potential foreclosure after suffering damage in 2024’s derecho and Hurricane Beryl.
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Palm Beach Estates, previously called Rockridge Apartments, saw its value drop from $86.3M in September 2023 to $38.1M this month, according to a CMBS Newsflash from Morningstar Credit. The complex at 16818 City View Place has been in special servicing for loan default since October, according to special servicer commentary.
The owner last made a payment on the $54M loan for the complex in June.
Morningstar Credit data lists Fercan Kalkan, founder of Houston-based distressed community investor Kalkan Capital, as the deal sponsor. Kalkan Capital’s website lists Palm Beach Estates in its portfolio.
Kalkan was also tied to three multifamily properties set for the block among $384M worth of multifamily properties up for grabs at a November foreclosure auction.
Kalkan Capital didn't respond to a request for comment for either article.
The company's financial woes come amid a 13% national distress rate, according to Cred iQ. The multifamily distress rate in the U.S. was second only to the office market's 19.3% distress rate in January.
While distress is rampant in Houston’s multifamily industry, the Kalkan property also experienced damage from a freak wind storm known as a derecho that moved through Houston in May. It was damaged again during Hurricane Beryl less than two months later, the same month Kalkan stopped making payments on the $54M loan, according to Morningstar data.
The deadly storms were a double whammy to many commercial property owners, which experienced fallen trees, extended power outages and shattered windows.
The extent of the damage to Palm Beach Estates is unclear, but Kalkan is paying for capital repairs, according to the servicer commentary.
The property dropped from 95% to 70% occupancy from September 2023 to September 2024.
The lender plans to continue discussions with the owner while dual-tracking foreclosure, meaning it will simultaneously pursue foreclosure as well as consider the borrower's avoidance options, according to servicer commentary.
The Class-C complex was originally built in 1976.
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