Stellar Planning to Move Forward with Parkmerced Expansion Project
San Francisco Chronicle reports: The owners of San Francisco's massive Parkmerced apartment complex recently made what sounded like a surprising statement. They were in danger of defaulting on a $500 million mortgage, but planned to move forward with a $1.2 billion, multi-decade expansion project on the property.
A company verging on default could imagine restructuring its debt and then spending billions in the future, the owners said, due to the terms of their debt agreement, which provides for an intermediary to renegotiate the loan so that it can be paid off over time.
But according to real estate finance experts, the middleman, which is called a special servicer, is required to protect investors who are owed mortgage payouts - not the owners of the complex, its tenants or the city - leaving the fate of the 3,221-unit Parkmerced very much in question.
But records show that Stellar currently is delinquent on loan payments for several of its CRE assets, including apartment complexes in Maryland, New York and Los Angeles, according to global commercial property research firm Real Capital Analytics.
Despite the seemingly bleak picture, there is hope for Stellar to hold on to Parkmerced and to proceed with the proposed development project, said Andrew Florio, an analyst with Real Capital. In comparison to Riverton, Florio said Stellar has less outstanding debt on Parkmerced.
"This is not a 'here we go again' situation," Florio said. "This is a little different ... succeeding might not be the right word, but surviving probably is. They feel confident they can work something out with the special servicer and will retain the property."
View the full article on San Francisco Chronicle: Stellar Planning to Move Forward with Parkmerced Expansion Project
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