Brookfield Properties bought a portfolio of troubled loans tied to over 2,000 apartments in San Francisco in a move that could make the firm one of the city's largest residential landlords at a time of weak local demand and softening rents.
Property owner Veritas defaulted on the loans, once valued at $915 million, a year ago, according to a document filed with San Francisco County. However, it's unclear from the records how much New York-based Brookfield paid.
San Francisco-based Ballast Investments was also named as a buyer of the loans, which span 76 buildings and were originally issued by Goldman Sachs.
Brookfield, Goldman Sachs and Ballast did not respond to CoStar News requests for comment.
Brookfield is now in a position to foreclose on the delinquent loans and take possession of the properties, according to Nigel Hughes, senior director of market analytics at CoStar. “Brookfield will likely keep ownership ... with a view towards improving occupancy and growing rents,” he said, adding the firm might sell when the market improves.
Veritas has already downsized its San Francisco portfolio. Prado Group bought loans tied to 20 apartments in December, after Veritas defaulted on $124 million of debt, according to previous reporting by CoStar News.
The San Francisco Business Times earlier reported the latest loan purchase.
San Francisco once had the highest apartment rents in the nation but has fallen behind as New York and San Jose, California, have closed the gap, according to CoStar data. Over the past three years, the average annual rent growth in San Francisco was 1.2%, whereas the national average was 5%.