Question 1

What is the current trading range for Houston Energy Corridor commercial notes?

Accepted Answer

Energy Corridor non-performing office notes are trading in the 55-75% of UPB range depending on current occupancy, lease term remaining on existing tenants, physical condition, and loan vintage. Notes on fully vacant buildings with no clear re-tenanting path are trading at 45-60% of UPB. Notes on buildings with partial occupancy (40-60%) from surviving tenants are trading at 65-80% of UPB. Notes on buildings where a new anchor tenant is in lease negotiation are trading closer to 80-90% of UPB as the workout thesis is partially de-risked.

Question 2

Are Houston hotel notes good acquisition targets in 2026?

Accepted Answer

Houston hotel notes fall into two categories: COVID-modification notes that have been in workout since 2020-2021 (good operational recovery but unworkable debt structure - these are strong acquisition candidates), and cyclically stressed notes tied to convention center or corporate travel demand fluctuations (more operational risk). Full-service Houston hotel notes in the Galleria and Medical Center submarkets have strong RevPAR recovery - buyers who acquire these notes at 75-85% of UPB and then do a deed-in-lieu or note modification can capture value from the operational recovery already in progress.

Question 3

How do I find Houston commercial note sale opportunities before they are publicly marketed?

Accepted Answer

Houston note sale deal flow is primarily accessed through: (1) commercial real estate capital markets brokers who have special assets relationships with regional Texas banks (Newmark, CBRE, JLL Houston offices); (2) direct relationships with special assets departments at Texas Capital, Cadence, Cullen/Frost, and Independent Financial Group; (3) debt fund brokers who specialize in Texas commercial loan portfolios. The Houston real estate legal community - attorneys who represent both lenders and borrowers in workout situations - is also an important intelligence network for identifying notes that are about to be marketed.