A series of distressed situations across property types and markets are moving into workouts, auctions and special servicing in early July. In Manhattan’s Lenox Hill neighborhood, a retail and garage condominium interest at The Royale has been transferred back to its lender. According to a deed in lieu of foreclosure filed in New York City property records, MetLife acquired the commercial and garage unit at 188 E. 64th St. for $44.1 million. The insurance company, which lends through MetLife Investment Management, has recently been active on the ownership side of distressed and non-core assets in New York, including selling a Times Square hotel and taking control of a foreclosed Garment District office property in 2024.
In Old Town Alexandria, two waterfront office buildings at 11 and 99 Canal Center Plaza are headed for receivership auctions. Real Insight Marketplace and Transwestern’s Mid-Atlantic Capital Markets Group are marketing the leasehold interest in the properties, which were built in 1987 and form part of the four-building Canal Center complex. The other two buildings in the complex, which has an assessed value of $126.8 million, are not included in the auction set for August 3-5, and one of the properties is being promoted as a potential residential conversion.
Hotel distress continues in South Florida, where the Hillsboro Beach Resort is slated for auction following a foreclosure judgment of $40 million in Broward County Circuit Court. Emerald Creek Capital 3 LLC obtained the judgment against borrower entities BNH IV HM TRI LLC and 1159 Hillsboro Mile LLC on a mortgage with $26 million in principal outstanding, plus interest and fees. The 81-unit oceanfront hotel on 1.93 acres at 1159 Hillsboro Mile is scheduled for auction on July 16.
In Northern New Jersey, AuctionAdvisors has been engaged to run a receivership auction for four income-producing properties in Orange and Newark. The assets, described as a mix of stabilized multifamily and mixed-use properties in two of the region’s stronger rental markets, will be offered individually at a live sale on July 14, 2026, at the Ramada by Wyndham East Orange.
On San Antonio’s River Walk, the Book Building at 142 E. Houston St. and several adjacent vacant properties are in foreclosure and moving toward auction. A notice in Bexar County records indicates that ownership entity Soledad House LLC is in default on a $3.6 million loan from First United Bank, while the properties carry an appraised value of about $14.8 million. AMS Commercial Real Estate acquired the assemblage in 2016 with plans for a mixed-use project that would have included an 83-key hotel and about 96,000 square feet of retail space.
Multifamily distress is also surfacing in the securitized debt market. The 2 Washington loan, totaling $131.5 million across three CMBS transactions, has transferred to special servicing after cash flow was disrupted. Although the Brooklyn property is categorized as multifamily, its units were master leased to Sonder for short-term rentals, and Sonder’s November 2025 bankruptcy and shutdown cut off most of the property’s income.
Morningstar Credit also reports that the Alabama & South Carolina Multifamily Portfolio loan, with a balance of $30.4 million and representing 3.2% of the BMO 2024-5C7 transaction and exposure to CMBX.18, has gone to special servicing following delinquency and default. The collateral consists of two apartment assets in Hoover and two in Greenville, with late payments starting in December 2025 and the loan officially delinquent since March 2026. No cause for delinquency has been disclosed, and no financial reporting has been provided since issuance.
In Houston, the Park At Saronno loan, with a balance of $29.3 million and representing 7.1% of the FREMF 2022-KF125 deal, has transferred to special servicing for payment default. The collateral is a 316-unit multifamily community where cash flow has remained 22% below underwritten levels on a trailing-12 basis, and occupancy has fallen from 97% at origination to 85% as of March 2026.
