Lenders Look To Offload $1B In Delinquent Loans Tied To 95-Building Multifamily Portfolio
The largest apartment landlord in San Francisco has stopped paying its debt tied to 95 multifamily properties in recent months, and its lenders are now looking to sell those loans.
Eastdil Secured is marketing $1B of delinquent loans backed by Veritas Investments properties totaling 2,452 units, roughly one-third of the firm's San Francisco apartment holdings, the San Francisco Business Times reported.
The properties are spread across two portfolios. The first consists of 75 buildings described as “trophy” multifamily assets situated in the city's "most coveted neighborhoods," according to the SFBT. The second portfolio comprises 20 buildings that house 303 rent-controlled units. The properties collectively have a 65% occupancy rate, according to Multifamily Dive, citing Trepp.
Veritas, along with joint venture partner Baupost Group, defaulted on a $448M loan secured by 62 multifamily properties, Fitch Ratings reported in January. That came after the loan was transferred to special servicing in November and the sponsor indicated it wouldn't be able to pay off the loan at maturity, declining to exercise a one-year extension option, according to Fitch.
This type of distress has been more commonly seen in the struggling office market, where big loans have been transferred to special servicers in recent months. But the multifamily sector apparently isn't immune.
“While we’ve all seen the stories about office usage going down in the wake of hybrid work, multifamily operators in San Francisco have to contend with even more challenges, including increased city regulation, increased taxes, more pandemic impacts and the rising cost of doing business here,” a Veritas spokesperson said in an emailed statement to Bisnow.
The spokesperson said Veritas is continuing to work with its partners and lenders on a resolution regarding the portfolio.
Veritas, founded in 2007, has more than 320 buildings and 7,500 units across the San Francisco Bay Area and Los Angeles area, according to its website.