$43 Million in 2025 Houston Apartment Loans Bet on a Tax Break and Are Now Late

When Argentic Real Estate Finance wrote a $24 million loan on Mia West in March 2025, the property tax line in its underwriting was zero.

The 270-unit complex at 12903 Brant Rock Drive, about 18 miles west of downtown, had just put its land under a 99-year ground lease with the Houston Housing Authority, and the lender counted on the tax exemption that was supposed to follow, according to the BBCMS 2025-5C34 prospectus filed April 29, 2025.

Nineteen months later, Mia West and its sister property, the 224-unit Mia East at 3950 Ashburnham Drive, are both behind. The trust's Oct. 13 remittance data, filed with the SEC on Oct. 29, shows the two loans, $43 million together, as 30 to 59 days delinquent and paid through Aug. 6.

Neither loan is in special servicing. Trimont, the servicer, has advanced $132,950 of interest on Mia West and $107,943.75 on Mia East to keep bondholders paid.

What the 2025 underwriting assumed

Both loans closed March 10, 2025, as five-year, interest-only refinancings at 6.65% on Mia West and 6.82% on Mia East. On Mia West, the sponsors, Anthony Gupta and Eric Trucksess, paid off an $18,707,097 loan and took out $3,570,530 of equity.

Mia West's net operating income for the 12 months through January 2025 was $1,684,968. The lender underwrote $2,113,177, and the prospectus puts the difference mainly on the expected tax savings.

The appraisals rest on the same assumption. Mia West was valued at $34.4 million with the exemption and $30.3 million without it; Mia East was valued at $26.4 million and $22 million, which puts its loan at 86.4% of the as-is figure.

In exchange, Mia West agreed to hold 67 units for households under 80% of area median income, 63 under 60% and five under 30%, and to pay the authority a compliance fee plus 12% of its tax savings.

The prospectus also disclosed that the Harris Central Appraisal District had not yet granted the exemption. Counsel for the housing authority gave the lender an opinion that approval was "more likely than not."

What the servicer reports show now

At securitization, Mia West was 88.9% occupied on its Feb. 11, 2025 rent roll, with an average rent of $1,008, and Mia East was 93.3% occupied.

The June 2026 report, which carried full-year 2025 results, had Mia West at 77% occupancy and debt service coverage of 1.016, down from 1.31 at securitization. Mia East was at 88% and 1.0236.

Then the first half of 2026 came in. Mia West collected $1,263,180.02 of revenue in six months and kept $562,041.71 of it as net operating income, against $806,866.65 of debt service, for coverage of 0.6965 at 75% occupancy.

Mia East reported coverage of 0.6593 with 72% of its units occupied. A UMoveFree locator listing for the property shows asking rents from $770 for a 510-square-foot studio to $1,355 for a two-bedroom, two-bath unit, with Asset Living as manager.

Cushman & Wakefield's third-quarter MarketBeat puts Briar Forest West Memorial, the submarket named in the appraisal, at 11.1% stabilized vacancy, unchanged from a year earlier, while effective rent of $1,240 is down 4.0%.

Waterford Grove already tested the clause

The loan documents spell out what happens if the exemption does not arrive. If it was not granted by March 10, 2026, or the housing authority program documents are terminated, the borrower has 60 days to pay Mia West's loan down to 1.25 times coverage and an 8.40% debt yield, plus yield maintenance, and the guarantors are personally liable for that amount.

Houston has watched that clause play out once this year. Bisnow reported on March 23 that the $62.5 million loan on Waterford Grove, a 550-unit complex at 3125 Crestdale Drive, went to special servicing after its housing finance corporation exemption fell to House Bill 21, and that the borrower declined the paydown to 1.25 times and an 8.5% debt yield.

KBRA's Sept. 30 report said Waterford Grove, $60 million in MSBAM 2025-5C1, had returned to 30-plus days delinquent.

The Mia properties went through a housing authority instead. HB 21 rewrote the rules for housing finance corporations, and Texas Housers noted that it left housing authority exemptions untouched.

The authority changed course about six weeks after these loans closed. On April 25, 2025, Bisnow reported that new chief executive Jamie Bryant had stopped considering new public facility corporation and Chapter 392 deals.

"One of the very first things I did when I stepped in here was I turned off the spigot," Bryant told KPRC in October 2025. Existing PFC deals stay in place unless a party breaks its obligations, the station reported.

Appraisal districts elsewhere in Texas have pushed back on similar structures. The Nueces County Appraisal District denied exemptions for 13 complexes in the Corpus Christi Housing Authority's workforce housing program, properties appraised at $350 million, KRIS 6 reported.

What it means for owners and investors

Anyone pricing 1980s garden product on the west side should start from the as-is appraisals. Without the exemption, Mia West was worth about $112,222 a unit and Mia East about $98,214, against debt of $88,889 and roughly $84,821 a unit.

Lee & Associates puts Houston's third-quarter cap rate at 6.8%, and the 10-year Treasury closed at 4.94% on Oct. 30. A full tax bill on these properties comes straight out of the net operating income a buyer would capitalize at that rate.

Trepp's September figures, reported by Scotsman Guide on Oct. 6, put multifamily CMBS delinquency at 8.04%, up from 6.59% a year earlier. Waterford Grove's loan and both Mia loans were written in 2025.

What to watch next

The November remittance report, which this trust has filed near the end of most months, will show whether the two loans cure, slip to 60 days or transfer to special servicing.

Another Houston loan in the Oct. 29 filings has gone further. The Falls Houston Multifamily Portfolio, a $64.5 million 2024 loan on 942 units, is 90 to 120 days late, and its 442-unit Miami Gardens property on Kempwood Drive is now flagged as lender-owned.

The filings leave the central question open. Neither the prospectus nor more than a year of monthly servicer data says whether the appraisal district ever granted the Mia exemption, and the March 10, 2026 deadline passed while both loans were still current.