A Houston apartment-building investor defaulted on its loans, forcing the lender to foreclose on four multifamily communities. Applesway Investment Group borrowed nearly $230 million to buy four separate apartment complexes with more than 3,200 units during the pandemic. The four Class B and Class C Houston apartment complexes were all built before 1981. (The Reserve at Westwood is pictured.)

Arbor Realty Trust, a publicly traded mortgage company, foreclosed on the properties after Applesway defaulted on the loans. New York-based Fundamental Partners reportedly purchased the Houston properties for below the value of the loan.

The default was blamed on rising interest rates. The Wall Street Journal reported that the interest rate on Applesway’s loan had risen from 3.4% to around 8%, according to loan information obtained from data firm Trepp Inc. The WSJ story also reported that real-estate analytics firm Green Street estimates that apartment-building values are down more than 20% from their peak, meaning some buildings with sizable, floating-rate mortgages no longer generate enough profits to make debt payments.