Houston Property In Chetrit Group’s Troubled $481M Portfolio Slated For Foreclosure Auction
A Houston multifamily property slated to be sold at a foreclosure auction in August is part of a troubled portfolio purchased with a $481M CMBS loan, according to public records.
Forest View Owner LLC borrowed the money from JPMorgan Chase to buy the complex in Baytown, according to a July 16 substitute trustee's sale notice filing. Forest View Apartments is part of a 43-property portfolio owned by New York City-based Chetrit Group, public records show.
Chetrit Group took out the $481M loan in June 2019 for a portfolio of multifamily and student housing properties throughout the Sun Belt, New York, Illinois, Indiana and Ohio, totaling 8,681 units. The floating-rate loan was originated at an 84% loan-to-value ratio.
That loan was transferred to special servicing when it reached maturity default in July 2022, according to special servicer comments.
As of January 2023, Chetrit Group was looking to sell portions of the portfolio as default loomed. It managed to offload some properties, including a three-complex portfolio in Memphis, Tennessee.
A forbearance agreement was executed in June 2023, but Chetrit Group defaulted under that agreement, and the properties were placed into receivership in November, according to special servicer comments. A receiver now has possession and control of the collateral properties, according to the commentary.
Chetrit Group continued to sell parts of the portfolio this year, including two properties in Jacksonville, Florida.
The loan has an outstanding balance of $221.1M, with interest bringing the total exposure to $224.5M, according to Morningstar Credit data. The occupancy of the portfolio in March 2022, the most recent record available, was 71%.
The Chetrit Group didn't respond to a request for comment, and JPMorgan Chase declined to comment.
The Harris County foreclosure auction is scheduled for Aug. 6, though a substitute trustee's sale notice filing doesn't ensure foreclosure will happen on that date. Forest View Apartments is a 157-unit garden-style complex that was built in 1976 and remodeled in 2008, according to Morningstar Credit data.
There is at least one other foreclosure sale notice filed for a Texas complex in the portfolio, a student housing complex in San Marcos called Riverside Ranch, online records show.
Chetrit Group has faced other problems with the portfolio, including a lawsuit from Indiana tenants, The Real Deal reported. Tenants at seven Indiana complexes levied complaints about conditions at the properties, saying they worsened around the time of the maturity default. Complaints included deferred maintenance, a lack of heat, trash piles and flooding that caused microbial growth, according to the lawsuit, filed by the state attorney general.
Chetrit Group has other loans in special servicing, including a $77M loan backed by two mixed-use properties in New York's SoHo and a $151M loan for the New York office building at 65 Broadway, according to TRD. Another $95M loan for a Chetrit Group office building in Midtown Manhattan entered special servicing in May, Commercial Observer reported.
