The impending foreclosure on the mid-Market apartment building NEMA is apparently no longer impending, as the developer behind the luxury high-rise has struck a deal with its creditors.
Even those of us who cannot afford good Champagne were considering popping the Andre over this past October’s news that the 10th and Market Street luxury apartment complex NEMA was facing foreclosure proceedings. After all, what’s not to dislike about NEMA? The property was the poster child for the late 2010’s VC/tech boom, with its pool mermaid parties, attempts to whitewash San Francisco, and cringe-worthy promotional videos that even their tenants hated.
But lo, it appears there will be no foreclosure of NEMA. The Chronicle reports that NEMA’s owner Crescent Heights has struck a deal with its lenders to avoid foreclosure. There’s not much information about the terms of the deal, as the Chronicle simply says “The parties agreed to modifications in Crescent Heights’ loan agreement,” and that “details were not disclosed.”
And it seems like it was not a good thing, as the Chronicle also notes in their report, that Wells Fargo sued Crescent Heights last week over the building's mortgage debt. But Crescent Heights is spinning that lawsuit as a positive development, describing it as a mere “servicing procedure” that they say will help them out of this mess.
“Crescent Heights is pleased to confirm it has agreed in principle to a loan modification with its lenders, and that this filing is a servicing procedure while loan documentation is finalized,” a Crescent Heights spokesperson said in a Tuesday statement to the Chronicle. “We are grateful to our lenders and the servicer for working with us to put in place a long term plan that ensures NEMA San Francisco will continue to maintain its position as one of the city’s preeminent residential rental buildings.”
That, too, may be spin. Crescent Heights refinanced the building with a $384 million CMBS (commercial mortgage-backed security) loan in 2019, which was right before the pandemic, and the place has reportedly lost half of its value since. And as of summer 2021, the building was looking to convert 150-200 units to short-term corporate housing which indicates they were maybe having vacancy issues.
The Chronicle reports that NEMA currently claims a 90% occupancy rate. “Occupancy-wise we are running fine,” a Crescent Heights spokesperson told the Chronicle. “But the prices are way off from before COVID-19.”