Stabilizing a Distressed Multifamily Asset
January 21, 2026
The Challenge
A debt fund had originated a loan to a multifamily operator who managed a 250-unit, 1970s-vintage, C+ class apartment building in Tulsa, Oklahoma. After a fire at the property, about 20 units suffered significant damage, and the borrower failed to properly execute unit repairs and renovations, leaving more than half the units in disrepair.
As property cash flow deteriorated, the loan went into default, and the lender ultimately foreclosed. What had once been valued at nearly $30 million deteriorated to an estimated $10 million, and the asset became lender-owned (REO).
The Solution
Summer Street Advisors was engaged by the lending group to provide ongoing asset management and loan surveillance, including quarterly financial reporting to the warehouse lender across the broader loan portfolio. In parallel, SSA was asked to take a hands-on role with the REO asset.
Our work included:
- Diagnosing the root causes of underperformance
- Evaluating whether the asset’s issues were structural or execution-related
- Assessing the feasibility of stabilizing and repositioning the property
We determined that the primary problem was not the market or the asset itself, but execution. With proper capital deployment, a strong renovation and re-leasing strategy, and disciplined asset management, the property could be repositioned successfully.
The Outcome
Under improved management, the property was successfully stabilized. Damaged units were renovated and brought back online, and occupancy increased from approximately 50% to 95%.
What began as a nonperforming loan tied to a deeply distressed asset ultimately became a successful value-recovery story. The REO property, once written down from $30 million to $10 million, was sold for $25 million, significantly mitigating lender losses.
SSA In Action
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