San Francisco’s housing market has entered troubled waters as a major investor this week announced the sell-off of much of his rental empire.
Landlord Mosser Companies in 2018 defaulted on an $88 million 2018 loan underwritten by its 459 rental units across 12 buildings in San Francisco.
The company’s creditor has now hired real estate firm Cushman & Wakefield to sell the multifamily properties. The San Francisco Chronicle reports this.
Mosser Companies tackled debt pre-pandemic with low occupancy rates, but as the City by the Bay grapples with a post-Covid doom loop, occupancy rates have risen as families move to escape rising crime.
This, combined with historically high interest rates when the loan matured, means Mosser and other real estate investors are looking to sell their assets.
Mosser Companies in 2018 defaulted on a 2018 $88 million loan that was underwritten by its 459 rental units across 12 buildings in San Francisco
The company’s creditor has now hired real estate firm Cushman & Wakefield to sell the multifamily properties
Homeless people return to the streets in the Tenderloins neighborhood, near San Francisco’s Moscone Center, where the APEC conference was recently held
“San Francisco has been experiencing a wave of real estate distress due to the economic turmoil caused by the COVID years,” a spokesperson for Mosser explained.
“And as the market reset is underway, a huge amount of real estate debt is coming onto the market, creating a push to refinance loans made before the pandemic.
Adding: ‘This also comes at a time when both overall vacancy rates and interest rates are at historic highs.’
The Mortgage Bankers Association estimates that there will be $2.6 trillion in real estate loan payments nationally through 2028, with 38 percent of that in the multifamily sector.
San Francisco also saw the sale of more than a third of its 2,4,000 rental units by multifamily landlord Veritas Investments after it defaulted on a $1 billion loan.
“It’s more about people emigrating, raising operating costs, all the eviction moratoriums and rent increase moratoriums – it’s just wreaking havoc on certain multifamily projects, especially when people take on short-term or variable-rate debt,” says John Drachman, co . founder Waterford Property Company, explained.
By January, the occupancy rate of Mosser’s properties had fallen to 82 percent.
“This is why multifamily properties in San Francisco are suffering so much and you have portfolios that have gone up for sale: multifamily properties have been hit by a triple killer, which is higher interest rates, lower occupancy rates and falling rents,” says Nathaniel Touboul. , said a real estate partner at law firm Allen Matkins.
A homeless encampment can be seen along Leavenworth Street in the Tenderloin neighborhood, just a few blocks from Powell
Headlines using the terms “garbage city,” “ruined city” and “fallen city” show how crippling drug problems and widespread homelessness problems remain a problem for residents.
The street then continues north for more than a mile past some of the city’s most troubled areas, which, as the photos of the gutted storefronts show, continue to impact businesses.
There, just outside Nancy Pelosi’s federal building, drug dealers open their shops every day in full view of the public, with users injecting and smoking without interference from law enforcement.
“In San Francisco, business was booming in 2018 and 2019, people were paying a lot of money for apartments and vacancy rates were extremely low. No one at the time accepted the vacancies and falling rents that we experienced after the pandemic, Touboul said.
And he adds, “What’s happening now is really an illustration and a reminder that San Francisco is ultimately a city of boom and bust, and that real estate is cyclical.”
San Francisco has become an international synonym for urban squalor with the proliferation of open-air drug markets and an exodus of businesses, retailers and now residents.
Data from the Office of the Chief Medical Examiner shows that San Francisco entered its deadliest year on record for drug overdoses, with 752 accidental overdose deaths as of Dec. 6.
It tops the highest year ever – 2020 – when 726 people died.
And the city stands to lose $200 million a year in lost tax revenue from the exodus of businesses.
The famous thoroughfare runs for over a kilometer along the city’s embattled centre, where open-air drug use is rife
The situation in Powell – located at one of the stops on the so-called “Doom Loop” of Union Square, City Hall and Tenderloin and Mid Market – is indicative of the current state of the city, with Union creating a hive of unsavory post-pandemic activity end point of the street on the Markt
San Francisco also has a dismal high office vacancy rate, at 35.9 percent in December.
That situation has been exacerbated by the departure of several major companies, including accounting giant KPMG, which announced earlier this month that it will leave its $400 million downtown building of the same name.