November 21, 2011

Is That The Fat Lady We Hear Singing Over At CitiApartments?

2099 Market Street

Pledged as collateral on a number of loans which are now in default, it’s a plugged-in tipster that notes "the Debtors’ respective membership interests in the limited liability companies" which own the following properties are scheduled to be sold on December 12:

78 Buchanan Street
233-241 Church Street
252-258 Church Street
950 Franklin Street
1844 Irving Street
1401 Jones Street
2677 Larkin Street
2075-2083 Market Street
2099 Market Street
1870 Pacific Avenue
500 Stanyan Street
645 Stockton Street
1340-1360 Taylor Street
1320 Washington Street
1461-1465 Burlingame Avenue (Burlingame)

Some might recognize the 2099 Market Street adress as the headquarters of the group formerly known as CitiApartments and from which "Frank Lembi used to listen to opera on Wednesday evenings from his office on the mezzanine" according to our tipster.

UPDATE: As a reader quickly catches, it’s the Membership Interests in the LLCs that own the properties above which are being auctioned against $29,700,000 in mezzanine debt that’s in default and the properties listed above remain "encumbered by a deed of trust that secures the Property LLCs’ total aggregate indebtedness to a senior mortgage lender in the original principal amount of $103,300,000."

CitiApartments Is No More! Well, Sort Of… [SocketSite]
The Story (And Faces) Behind The Rise And Fall Of The Lembis [SocketSite]

First Published: November 21, 2011 10:30 AM

Comments from "Plugged In" Readers

So wait, are these buildings that they haven't lost already? They went through a few waves where the bank took the bldgs back and they were sold off. Is this a new batch?

These guys must still own rental properties in SF; can't imagine they lost them all??

Posted by: 47yo hipster at November 21, 2011 10:38 AM

1320 Washington is a parking garage, isn't it? I'm betting that building in Burlingame is commercial.

Posted by: sfrenegade at November 21, 2011 11:18 AM

sfrenegade wrote:

> I'm betting that building in Burlingame
> is commercial.

All of Burlingame Avenue East of El Camino Real is Commercial. The street had real low turnover when I was a kid (When I was in college the old Italian butcher at Bon Appetit Foods where my Mom bought meat for years was still giving free coffee with a shot of brandy) but in recent years it seems like every time I drive down the street half the business are new (even the Chevron that was on the corner of El Camino for as long as I can remember is gone)...

Posted by: FormerAptBroker at November 21, 2011 12:57 PM

Looking at the legal notice, it appears that what is being auctioned off is an interest in the LLCs holding the mezzanine loans on these buildings, not the buildings themselves. The buyers would just be taking the place of the current lenders who are probably in third place behind the first and second leans.

[Editor’s Note: Good catch and since re-worded above.]

Posted by: Dave at November 21, 2011 1:18 PM

Posted by: inclinejj at November 21, 2011 1:29 PM

These buildings have been taken over (or are in the process) by Veritas Investments.

Posted by: sf at November 21, 2011 1:33 PM

A third mortgage for properties purchased at or near the height of the bubble by people who didn't care what they paid?

I bid 50 cents.

Posted by: tipster at November 21, 2011 2:35 PM


sf wrote:

> These buildings have been taken over
> (or are in the process) by Veritas
> Investments.

Veritas Investments was just in the news last week:
http://articles.sfgate.com/2011-11-16/news/30408692_1_whistle-blower-property-manager-e-mail

Posted by: FormerAptBroker at November 21, 2011 4:39 PM

I wouldn't be surprised if all this shiza is underwater, especially if these were brought during the lembis infamous (05-07) 'buying spree.'

Posted by: 47yo hipster at November 21, 2011 10:43 PM

"Looking at the legal notice, it appears that what is being auctioned off is an interest in the LLCs holding the mezzanine loans on these buildings"

If there are just the interest in the LLCs securing mezz loans, I'm not sure that they're worth that much. The senior lienholder holds all the cards here. The purpose of the mezz structure sounds good in theory -- i.e. that you can seize the holding company much more easily than you can foreclose on a property. But in practice, I don't really understand why it'd be worth a whole lot more than the original loan.

Funny that you mentioned Frank Lembi on the mezzanine before. Maybe you should re-title it "Listening on the Mezzanine to the Fat Lady Sing Over at CitiApartments."

Posted by: sfrenegade at November 22, 2011 10:52 AM

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