Ballast, Goldman Relinquish 1,211 San Francisco Apartments

Ballast Investments and Goldman Sachs have officially surrendered 82 apartment buildings to their lender after the properties hit financial trouble. 

The partnership transferred 1,211 units across three portfolios to RBC Capital, Royal Bank of Canada’s parent company, in a deed-in-lieu-of-foreclosure transaction on July 17, according to the San Francisco Business Times.

As of that date, Ballast and equity partner Goldman owed RBC almost $730M, the Business Times reported, citing property records.

Ballast and Goldman didn't respond to requests for comment. 

RBC had intended to tap San Francisco-based real estate investment firm Hamilton Zanze to manage and operate the three portfolios, according to the Business Times.

Hamilton Zanze didn't respond to a request for comment from Bisnow.

RBC sued Ballast and Goldman to place two of the portfolios into receivership, according to the Business Times. The suit alleges that Ballast’s property management company and affiliate Brick + Timber didn't keep its properties from further “deterioration.” 

On July 11, a San Francisco Superior Court judge appointed Los Angeles-based Wald Realty Advisors as receiver for the two portfolios of 58 buildings, the Business Times reported. 

A few notable San Francisco assets have defaulted on their loans or entered special servicing in recent months, including a $1.8B default on the 3,221-unit Parkmerced, prompting concerns that more multifamily defaults are on the horizon.

By year's end, $1.5B in CMBS multifamily loans are set to mature in San Francisco, according to Trepp. 

But one debt analyst told Bisnow not to expect a wave of multifamily foreclosures, as many investors with sizable loans in the Bay Area are modifying existing terms or trying to pay at least a portion of their mortgage each month. 

“The only CMBS loan of any material size maturing soon is The Waterbend [$43M] which is south of the city,” Morningstar Credit Analytics Senior Vice President David Putro told Bisnow in an email. “It’s been underwater for quite a while but has remained current on payments as the owners are covering the shortfalls.” 

Parkmerced is the only San Francisco multifamily loan in special servicing, although a “handful” of smaller loans are on Morningstar’s internal watchlist, Putro said.

“So at least on the CMBS side, I don’t expect a near-term flood of properties being given back to the lenders,” he said.