By Roland Li

April 16, 2024

Parkmerced, one of San Francisco’s biggest apartment complexes, is at risk of defaulting on its nearly $1.8 billion mortgage.

Owner Maximus Real Estate Partners has requested the transfer of the mortgage to special servicing, a move that can lead to foreclosure, according to a report by Morningstar, a financial services firm.

S.F. Bay Area property mapHere’s who owns every building in the region

The massive loan was originated in 2019, when Maximus sought to start construction on its long-planned expansion of the property next to Stonestown mall from 3,221 apartments to 8,900 apartments. That never happened as the pandemic upended the housing market.

The loan is due in December. In September, the occupancy rate was 83%, with cash flow “well below” the level needed to cover debt payments, according to Morningstar.

Maximus couldn’t immediately be reached for comment.

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.

Numerous high-profile San Francisco properties have slid into foreclosure or been abandoned by owners in the wake of the pandemic after demand in all real estate sectors sank. Major landlord Veritas lost 2,165 apartments in January in a foreclosure auction. Another big owner, Mosser Companies, defaulted on 459 units and is at risk of losing them.

Parkmerced, which was built by MetLife in the 1940s, has additional challenges after more than a decade of efforts to greatly expand it.

The plan to nearly triple the amount of housing on site would require new streets, transit improvements and 1,538 of the existing apartments, which are rent-controlled, would have to be replaced for the same tenants. Many of the project’s building permits have yet to be approved, as SFGATE reported last year. (SFGATE and the Chronicle are both owned by Hearst but operate separately.)

It isn’t the first time Parkmerced has run into financial troubles. In 2010, then-owner Stellar Management said it was at risk of default on a $500 million mortgage after the Great Recession bruised the real estate market. The current owner bought a stake in the project in 2014.

Reach Roland Li:; X/Twitter: @rolandlisf