0.76x Coverage: Expenses Push Two 1970s Houston Apartment Loans Toward Foreclosure

Bender Creek Apartments, 110 units on U.S. 59 in Humble, was on the Nov. 3 Harris County foreclosure list. Wilmington Trust, trustee for the Benchmark 2018-B6 commercial mortgage trust, posted it in a substitute trustee notice filed Oct. 8.

The loan has been paid only through Feb. 6, 2026, according to the trust's Oct. 6 servicer data on SEC EDGAR.

Parker Square Apartments, 176 units on Shady Lane in north Houston, sits in the same trust with the same paid-through date. Its loan went to the special servicer on April 29 and Bender Creek's on May 5, and both carry the workout code for foreclosure.

We could not find a county record or news report showing whether anyone bought Bender Creek on Nov. 3.

What Deutsche Bank underwrote in 2018

Deutsche Bank made both loans in August 2018: $8,650,000 on Parker Square at 5.085% and $5,000,000 on Bender Creek at 5.00%, each fixed for 10 years with 30-year amortization. The borrowers, Goldke Enterprises, LLC and BC Humble Enterprises, LLC, share the same three carve-out guarantors, according to the trust's 2018 offering annex.

Both were cash-out refinancings. Parker Square's loan paid off $5,361,756 of old debt and distributed $2,796,866 to the owners, and Bender Creek's paid off $2,972,120 and distributed $1,534,336.

The underwriting put operating expenses at $1,047,622 a year for Parker Square and $516,497 for Bender Creek. Occupancy was 96.0% and 97.3%, and underwritten cash flow covered debt service 1.44 times and 1.64 times.

June 20, 2018 appraisals valued the properties at $11,850,000 and $7,360,000, and the servicer file still lists those as the most recent values.

Where the cash flow went

Parker Square took in $2,144,024.98 in 2025, about 13% more than the $1,897,859 Deutsche Bank underwrote, and Bender Creek's $1,202,677 was about 12% above its underwritten $1,070,003.

Expenses climbed much faster. Parker Square spent $1,591,623.09 to operate in 2025, about 52% above the underwritten figure, and Bender Creek spent $956,662.58, about 85% above it (the percentages are our arithmetic from the filings).

That left Parker Square with $552,401.89 of net operating income against $562,625.52 of debt service, or 0.98 times coverage, at 94.32% occupancy. Bender Creek covered its debt 0.76 times, and its occupancy had fallen to 80.91%.

Per unit, 2025 costs come to about $9,043 at Parker Square and $8,697 at Bender Creek. The National Apartment Association reported a national average of $8,657 per unit for 2024, so the 2018 budgets of about $5,952 and $4,695 a unit were the outliers.

The servicer data has no line items, so the filings cannot show how much of the increase was insurance. Yardi Matrix's March 2024 expense bulletin put Houston's average insurance cost at $1,115 a unit after a 40.4% one-year jump, and said premiums nationally had risen 129% since 2018.

Parker Square's listing on HAR also advertises "No electric bill," which puts residents' power on the owner's side of the ledger.

What it means for owners and investors

Both coupons are fixed near 5%, and neither loan matures until 2028 (Parker Square on Aug. 6, Bender Creek on Sept. 6), so a higher rate on new debt is not what pushed them into default.

CRED iQ's numbers suggest that is unusual for loans this old. It found that 15% of multifamily loans written in 2016, 2017 and 2018 would need new equity to refinance, against 46% of 2021 and 2022 loans.

Braes Hollow, whose loan was written in 2016, shows the other outcome. The complex has 254 units built in 1976 on South Braeswood and covered its debt 2.257 times in the first half of 2026 at 93% occupancy, and its $6,138,456.35 balance matures today.

Braes Hollow's expenses ran about 62% of revenue over that half-year, against about 74% at Parker Square and 80% at Bender Creek in 2025. Timbergrove Heights, 95 units built in 1970 on West T C Jester Boulevard, covered 1.1147 times and matures Dec. 1.

For a buyer, the trust's balances work out to about $39,870 a unit at Bender Creek and $43,120 at Parker Square, while the 324-unit Holly View in northwest Houston sold for about $97,222 a unit in October, Connect CRE reported. Lee & Associates put Houston's third-quarter average sale price at $150,010 a unit, with cap rates at 6.8%.

CRE Daily's Nov. 2 summary of CRED iQ's October data put Houston's CMBS distress rate at 15.3%, against 11.2% nationally.

A bid still has to carry 2025 expenses on rents that are soft for this class. RealPage reported Houston Class C rents down 5.4% over the year in the third quarter, and HAR lists Bender Creek at $865 to $1,175 a month and Parker Square at $1,000 to $1,575.

A buyer's financing would also cost more than these loans did: the 10-year Treasury closed at 2.87% on Aug. 17, 2018, the day Bender Creek's loan was made, and at 4.84% on Nov. 5, 2026, when SOFR was 3.92%.

Workforce Solutions reported that the Houston area shed 7,300 jobs in September, although the region was still up 33,600 jobs over the year.

What to watch next

The trust's November servicer report should show whether Bender Creek became lender-owned after the Nov. 3 sale. The notice names K-Star Asset Management as loan servicer, a KKR subsidiary that Morningstar DBRS says was special servicer on $44.7 billion of loans at the end of 2024.

Parker Square is not among the Harris County notices we reviewed for the November sale. The next county sale is Dec. 1, the first Tuesday of the month.

KeyBank Real Estate Capital, the servicer, had advanced $374,957.01 of principal and interest on Parker Square and $214,655.45 on Bender Creek through the Oct. 6 report, and neither advance was marked nonrecoverable. The monthly payments it is covering are $46,885.46 and $26,841.08.