A decade ago we were cringing in horror over the douchey marketing video for a luxury apartment tower that went up next door to the building we used to call the Twitter Building. Now, it's facing foreclosure.
Remember NEMA? It was the first of what would be a gaggle of high-end rental buildings that sprang up in the last decade in San Francisco, ostensibly helping to ease the housing crisis but only by adding a lot of overpriced, cookie-cutter units to the mix. And it was hard to miss, given its 37 stories and dark-panel glass, on a stretch of Market Street that for decades had been pretty downtrodden.
The building was developed in 2012/2013 by Miami-based Crescent Heights, a major developer nationwide, and as the SF Business Times reports, they refinanced the building in 2019 with a $384 million CMBS (commercial mortgage-backed security) loan.
As of August, the lender transferred the loan to special servicing, per the Business Times. And this month, Trepp, a firm which provides data and analysis on CMBS loans, put out a warning that the building had lost over 50% of its value in the last five years. NEMA is reportedly now valued at $279 million, down 52% from a 2018 valuation of $543.6 million.
It's not clear if this has to do with vacancy in the building, achievable rents, or other factors.
Now, the loan is reportedly in default, due to a failure to pay operating expenses, and that default has triggered several things having to do with the loan, including a reordering of who gets paid back first, the Business Times reports.
We knew over two years ago that NEMA may be in trouble, as Crescent Heights was seeking approval from the city to turn about 200 of its units into corporate-style rentals, in order to fill vacancies.
As the Business Times notes, NEMA sits nearly across the street from 30 Van Ness, a.k.a. Hayes Point, the office and residential building that was branded Just a year ago, the Australia-based developer of that property was barreling forward and starting construction, but construction on the 47-story building was halted in August.