$58,705 a Door: Houston's Falls Apartments Now Appraise Below Their Loan

A lender's appraiser valued the three apartment complexes in the Falls Houston Multifamily Portfolio at $55.3 million on March 13, 2026. When Wells Fargo wrote a $64.5 million loan on the same 942 units in June 2024, the appraisal was $103.4 million.

The new value works out to $58,705 a unit. It is $7,959,460.03 below the loan's $63,259,460.03 balance in the trust's Oct. 29 servicer filing, and interest has been paid only through Jan. 11.

A year ago today, on Nov. 3, 2025, Falls of Braeburn, LLC and affiliated debtors filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, according to a Bondoro filing alert. Falls of Braeburn is one of the three borrowers on this loan.

What the 2024 loan assumed

The loan was a five-year, interest-only refinancing at 6.944% that matures July 11, 2029. The WFCM 2024-5C1 prospectus names Rao J. Polavarapu, who founded Falls Management Group, as sponsor and carveout guarantor.

Miami Gardens, with 442 units on Kempwood Drive in Spring Branch, is the largest of the three. Falls of Braeburn has 292 units on Braeburn Glen Boulevard, and Chelsea Lane has 208 on Boone Road in the Alief submarket; all were built between 1970 and 1977.

Wells Fargo underwrote $6,367,040 of net operating income, 1.35 times coverage on cash flow and a 62.4% loan-to-value. Occupancy across the portfolio had climbed from 72.5% at the end of 2021 to 88.7% on June 5, 2024.

The sponsor's own contribution was $77,934. The loan covered the rest: a $60,978,061 payoff of existing debt, $2,477,335 of closing costs and $1,122,538 of upfront reserves.

The loan moved to special servicing on July 11, 2025, about 13 months after closing. Multifamily Dive reported on Aug. 4, 2025 that the servicer cited "imminent monetary default" and that Morningstar called the reason "not entirely clear," since the portfolio was 89% occupied in December 2024.

Six properties, one operator

This is one of four CMBS loans in the latest servicer filings on properties from the Falls portfolio, and the servicers have cut the appraised value on every one.

Falls of Westpark, 352 units at 6130 Southwest Freeway, appraised at $45.5 million in October 2024 and at $25.4 million in March 2026. Its $29 million loan from December 2024 is coded lender-owned, as is Falls of Deer Park, a 441-unit Pasadena property whose value fell to $27.5 million from $37.6 million.

Falls of West Oaks, 288 units on Highway 6, was appraised at $22 million in March, down from $27.4 million in 2021, and its loan is 90 to 120 days late. Across the six properties and 2,023 units, the latest appraisals add up to $130.2 million, against $213.9 million at securitization.

The smallest declines are on the two 2021 loans, which carry rates of 3.74% and 3.8%. The properties behind the two 2024 loans, at 6.944% and 6.842%, lost between 42.7% and 52.5% of their appraised value.

Day-to-day operations moved to Lynd Management Group early this year. Bisnow reported on Feb. 23 that Lynd took over 10 properties with 3,633 units, four of them in Chapter 11, and could provide debtor-in-possession financing and bid as stalking horse on those four.

Bisnow cited the company's website for a peak of 21 properties and 7,180 units. The 2024 prospectus described the sponsor as owning 23 assets with more than 8,100 units in the Houston area.

What it means for owners and investors

These appraisals are a recent, public price on 1970s Houston garden product. At $58,705 a unit for Falls Houston and $72,159 for Falls of Westpark, they sit well under the $150,010 average sale price per unit that Lee & Associates reported for Houston apartment sales in the third quarter.

That $77,934 of sponsor cash looks small next to what the trust now carries. With the appraisal now $7,959,460.03 under the loan balance, bondholders carry nearly all of the remaining loss, and the servicer has already advanced $2,784,951.09 of interest plus $4,110,774.27 for taxes, insurance and other costs.

The submarkets around these properties are soft. Cushman & Wakefield's third-quarter MarketBeat has stabilized vacancy at 13.8% in Spring Branch, 13.4% in Southwest Houston and 12.4% in Alief, against 11.7% for the metro, and effective rents in those three down 2.0% to 2.9% over the year.

Rockridge Apartments, now Palm Beach Estates, went further. Multifamily Dive reported on Feb. 2 that an updated Morningstar appraisal cut the 881-unit property's value from $86.3 million in September 2023 to $38 million.

A buyer's debt will price off a 10-year Treasury that closed at 4.91% on Nov. 2, when SOFR was 3.95%. Bisnow reported Oct. 19 that Lincoln Property Co.'s Gabe Lerner, speaking at its Houston multifamily conference, estimated that about half the apartment loans maturing each year could end up with lenders.

CRED iQ put the metro's distress rate at 15.3% in October, up from 12.4% a year earlier, and Trepp's national multifamily CMBS delinquency rate was 8.04% in September. Yardi Matrix ranked Houston's 91.3% occupancy last among its top 30 markets in September.

What to watch next

Bisnow's February report said Lynd could bid as stalking horse on the bankrupt properties, subject to lender direction and the court. None of the pages we opened shows a sale motion yet, so whether Braeburn gets a court-tested price this year is still open.

The monthly servicer reports will show whether the lender-owned properties get listed, sold or appraised again. CRE Daily reported Nov. 2 that TPG and ACORE had raised more than $6 billion for opportunistic strategies.

Fannie Mae, meanwhile, posted Huntington Glen, 346 units at 12023 Bissonnet St., for today's Harris County foreclosure auction, the fifth straight month it has done so, Bisnow reported Nov. 2.