A Dallas apartment complex known for its ground-floor Tom Thumb is slated to be sold at a foreclosure auction in early February.

The lender, an entity connected to New York-based Ares Commercial Real Estate, has started foreclosure proceedings in Dallas County against a luxury apartment building east of downtown over the owner’s failure to service a $127 million loan, per the Dallas Business Journal.

The apartment building in question is The Gabriella, a 378-unit luxury apartment complex located at the intersection of Live Oak and Texas streets in Dallas. The multifamily property was developed by Greystar Real Estate Partners, which completed the project in early 2020.

Though the foreclosure auction has been set for February 6, the property sale is not expected to impact renters outside of seeing new management at the property.

Despite the apartment complex’s high-end amenities and great location, Greystar has been unable to raise rent prices on tenants due to the large number of multifamily projects being built around the area, according to Steve Triolet, senior VP of research and market forecasting at Partners, an independent commercial real estate firm in Texas.

Rent prices at The Gabriella range from $1,487 to $2,910 per month, based on data from Apartments.com. Though prices align with other luxury apartments in the area, Triolet said the property has seen negative rent growth for five of the past six quarters.

“With increasing debt costs due to high-interest rates, many apartment complexes are in for a great deal of short-term distress as near-record supply outpaces household formation for the current time period,” he said, per DBJ.

Rising interest rates have caused the capitalization rates for new loans and refinance appraisals to drop in recent years, causing rental properties to appraise for 20% to 30% less than where they were two years prior, according to Aaron Amuchastegui, CEO of Roddy’s Foreclosure Listing Service.

“Unfortunately, we are starting to see a lot of multifamily foreclosures being posted, even though most of them have been operating as expected,” said Amuchastegui, according to DBJ. “I am surprised to see this one being posted for foreclosure so soon after completion, and of the many postings we have seen over the last 12 months, this is one of the largest properties.”