Miami-based Crescent Heights, owner of the 754-unit Nema San Francisco apartment building, agreed to pay its lenders $10.5M as part of a loan modification to retain control of the 37-story property, according to the San Francisco Business Times.
A spokesperson for Crescent Heights confirmed to Bisnow that the parties arranged the loan modification.
Last August, the $384M CMBS loan backed by Nema entered special servicing as rising interest rates placed upward pressure on the property’s operating expenses, resulting in a default, the Business Times reported.
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The trustee of the $384M loan, Wells Fargo Bank, sued to place the two-tower property into receivership. The developer agreed to the loan modification “a few days after the suit was filed,” a spokesperson for Crescent Heights told the San Francisco Chronicle in early January.
Nema, at 8 10th St., has faced several challenges tied to shifting economic conditions in San Francisco over the past 18 years. Crescent Heights purchased the property in 2006 as a vacant office building. Originally, the firm planned to build a residential condominium project with about 720 units, but the subprime mortgage crisis forced the company to shift gears and develop rentals in 2012 instead.
The asset lost more than half of its value from October 2018 to 2023, declining from about $544M to roughly $280M, SFist reported, citing a Trepp report.
Today, monthly rents range from about $2,500 to $6,300 per month. Apartments.com reports the units range from about 460 SF to 1,400 SF.
Supply-demand fundamentals started to improve in the first quarter, according to NAI NorCal. San Francisco’s 5.9% vacancy rate is the lowest since Q1 2020 and “is a continuation of a trend of positive net absorption that has been a characteristic of the market’s slow recovery following the pandemic.”
Despite the tumult of the past 20 years, Crescent Heights has faith in its Mid-Market location.
“We are currently planning an extensive upgrade to the property, including common areas and units,” the spokesperson told Bisnow. “We are long-term believers in the future of San Francisco and are fully committed to the property.”
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