SF’s Largest Apartment Complex Ordered Into Receivership

Parkmerced has veered into receivership after Maximus Real Estate Partners defaulted on nearly $1.8 billion in loans secured by the largest apartment complex in San Francisco.

A court appointed the San Diego-based Douglas Wilson Companies to serve as a receiver for the 152-acre, 3,221-unit complex at 3711 19th Avenue, south of San Francisco State University, the San Francisco Business Times reported.

Maximus and its lawyers are set to appear in court later in March to “give legal reason why a receiver should not be confirmed,” according to court records.

The court order came three months after the locally based Maximus defaulted on a $1.5 billion commercial mortgage-backed loan, according to the newspaper. It said the landlord was in talks with lenders Barclays and Citigroup for months leading up to the December maturity default

The Real Deal, however, had reported in July that Maximus had defaulted on $1.775 billion in loans tied to the blighted complex.

It was in 2019 that Maximus recapitalized $1.8 billion debt with $1.5 billion in senior financing from Barclays and Citi and a $275 million mezzanine loan from Aimco.

Maximus had proposed redeveloping the World War II-era garden apartments by adding 5,700 homes, 230,000 square feet of shops and restaurants, 80,000 square feet of offices and a 64,000-square-foot community center.

Although plans for its redevelopment were approved in 2011, and new renderings put out in 2022, the project never broke ground, with Maximus founder Rob Rosania citing “sky-high construction costs, inflation and supply chain issues.”

Rosania said in December his firm was planning to close a loan extension in “coming weeks.” Notes sent to bondholders this month said future lender actions could include foreclosure.

Last April, $1.8 billion in loans backed by Parkmerced were turned over to special servicing at the request of the landlord, citing high vacancy and a looming loan maturity.

In May, the San Francisco Chronicle reported dozens of Parkmerced tenant complaints about broken elevators, lack of lighting in public areas, mold and mildew, leaks, car break-ins, rodents, overflowing dumpsters and squatters taking over vacant units.

The publication said the landlord may have cut back on security and maintenance, leading to rising crime and blight.

Parkmerced, a planned development from Metropolitan Life and designed by Leonard Schultze and Associates, opened its first apartments in 1944 for homecoming war veterans. It’s the second-largest complex in the state behind L.A.’s historic Park La Brea, another garden apartment complex with 4,225 units.

Douglas Wilson, founder of his eponymously named company, said its goal will be to safeguard Parkmerced and work toward its “repositioning.”

“It’s been lacking capital for some time,” Wilson told the Business Journal, adding his firm would address issues with life safety and spending. The company is considering bringing in a new property management firm.

— Dana Bartholomew