- Maximus Real Estate Partners is in default on $1.8B in loans for Parkmerced, and the property’s value has dropped by $700M since 2019.
- The 152-acre, 3.2K-unit multifamily complex is now appraised at $1.4B, $400M less than the amount owed.
- Maximus continues to make loan payments even as a lawsuit from a maintenance firm highlights ongoing operational challenges.
As reported on The Real Deal, Maximus Real Estate Partners defaulted on $1.8B in loans connected to San Francisco’s Parkmerced, the city’s largest apartment community.
Recent servicer commentary reveals the property’s appraisal plummeted by $700M since 2019, according to Morningstar.
Behind The Scenes
The 152-acre Parkmerced complex, comprising 3.2K units, was appraised at $1.4B, significantly lower than the $1.8B owed.
In 2019, Maximus refinanced the property with $1.5B in senior financing from Barclays (BCS) and Citi (C), incorporated into CMBS deals, and a $275M mezzanine loan from Aimco (AIV), which was later sold at a loss.
Loan Servicing Issues
In April, the loans entered special servicing with SL Green’s (SLG) Green Loan Services, prompted by a nearly 20% vacancy rate and impending loan maturity at year-end.
The latest servicer commentary highlights the default status, referencing “extensive open AP” (accounts payable) and the initiation of “property protective advances” to safeguard the property.
Despite the default, Maximus continues to make loan payments. Morningstar analyst David Putro indicates that the need for protective advances is concerning but lacks detailed insight into discussions between Maximus and the servicer.
Legal Challenges
Maximus’ financial strain is compounded by a lawsuit from maintenance firm Planned Building Services, which claims Parkmerced’s owners owe it $2.9M.
The suit alleges non-payment under a 2016 contract for maintaining common areas, including the towers’ lobbies and fitness centers. The case management conference is set for September.
In May, Bert Polacci, Maximus’ director of government relations, asserted to the Chronicle that ownership has not reduced services, spending $10M annually on maintenance for nearly 20 years.
Why It Matters
The default is concerning, if only due to its significant size and metro area. For now, the situation remains fluid, with ongoing loan payments, protective advances, and pending legal actions likely to shape Parkmerced’s future.
