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On the Verge of Becoming a Top Landlord in San Francisco

In a strategic acquisition, Brookfield Properties has taken over a collection of distressed loans linked to more than 2,000 apartments across San Francisco. This action positions the firm as a potential major player in the city's residential landlord scene, especially during a period marked by diminishing local demand and declining rental rates.

The original owner, Veritas, defaulted on these loans, previously valued at approximately $915 million, about a year ago. This information was revealed in a document filed with the San Francisco County. The exact amount paid by Brookfield, headquartered in New York, for these loans remains undisclosed.

Ballast Investments, based in San Francisco, was also involved in the acquisition of these loans. The loans, encompassing 76 properties, were initially provided by Goldman Sachs.

Attempts to contact Brookfield, Goldman Sachs, and Ballast for comments by CoStar News did not receive any response.

With this acquisition, Brookfield is now positioned to potentially foreclose on the overdue loans, thereby assuming ownership of the properties. Nigel Hughes, the Senior Director of Market Analytics at CoStar, suggests that Brookfield is likely to maintain ownership with the intention of enhancing occupancy rates and increasing rents. He also notes that the firm may consider selling these properties when the market conditions become more favorable.

Veritas has been reducing its portfolio in San Francisco. In a related development, the Prado Group acquired loans linked to 20 apartments in December, following Veritas' default on debts totaling $124 million. This was previously reported by CoStar News.

The recent loan purchase was initially covered by the San Francisco Business Times.

San Francisco, previously leading the nation in apartment rents, has experienced a downturn, falling behind New York and San Jose, California, as per CoStar's data. Over the past three years, the average annual rent growth in San Francisco was a mere 1.2%, significantly lower than the national average of 5%.

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