S.F.'s Parkmerced to see big investment to lease up units but plans for expansion still on ice

San Francisco Chronicle​

21-05-2025

The receiver that took over the 3,221-unit Parkmerced apartment complex in March says it plans to invest $70 million in fixing up the property with the goal of filling hundreds of vacant units and eventually putting it on the market.
Less than two months ago a court appointed Douglas Wilson Cos. as receiver of the property after a previous owner defaulted on $1.8 billion in loans.
The receiver has started a capital campaign at San Francisco's largest apartment complex to fix elevators, paint hallways, replace lighting and install hardwood floors.
'There is a litany of these fundamental issues that are going to change the look and feel and operations,' said Doug Wilson. 'It goes from fundamental issues like fixing elevators … to replacing lightbulbs in corridors in the towers that hadn't been replaced in years. That is several hundreds thousand dollars alone.'
The new management comes about 14 years after the city approved a plan to add about 5,800 units to the development by tearing down some of the townhomes and replacing them with mid-rise towers, but the plan never got off the ground.
Wilson was appointed after the previous owner, Maximus Real Estate Partners, stopped payment on its $1.8 billion mortgage. That loan was due in December of last year, when occupancy was 83% and cash flow 'well below' the level needed to cover debt payments, according to Morningstar.
Wilson said occupancy is currently at 80%, and that the goal is to bring it to 95%, which would require leasing nearly 500 vacant units.
'Once we enhance and add credibility and stability to the project we are confident we can get leasing up to the mid 90s,' said Wilson. 'There are mold issues in some of the townhouses. The towers need to be repainted. We are doing everything from boilers to appliances to upgrading the flooring.'
Brick + Timber, an affiliate of the San Francisco-based real estate firm Ballast, has been hired to manage the 8,000-resident complex.
Wilson said his company would be focused on making sure entitlements to add 5,800 units don't lapse. While eventually the approvals could be revised to be in keeping with state housing laws — several bills passed in recent years could increase heights and number of units at Parkmerced –— right now the focus is on improving what is currently there, Wilson said.
And given the lack of capital investing in San Francisco real estate, it's unlikely that Parkmerced will be put up for sale any time soon.
'That is not on the radar — could be some years from now,' he said. 'It's going to take a while to turn this ship around.'
Barclays and Citibank provided $1.5 billion in financing in 2019, and an additional $275 million mezzanine loan came from Aimco, which the company partially sold off last year. Parkmerced, was built by MetLife in the 1940s.
Over the last few years as vacancy rates rose and Maximus faced the increasing possibility of losing the property to its lenders, Parkmerced saw a dramatic escalation of complaints, for issues including broken elevators, lack of lighting in public areas, mold and mildew, leaks, car break-ins, rodents, overflowing dumpsters, and squatters taking over vacant units, according to tenants and public records.
Supervisor Myrna Melgar, who represents the neighborhood, said she has "been pleasantly surprised in my conversations with the receiver about improvements and the path forward."
"My priorities have always been with tenant protection and the best partner to develop," she said. "I will work with Maximus, Doug Wilson, Ballest or whomever enters the picture to achieve those two objectives."