San Francisco is hit by another huge blow as RESIDENTIAL property market begins to tank, with investor landlord ditching 459 homes across 12 buildings due to plunging occupancy blamed on crime

San Francisco’s residential real estate market hit choppy waters when a major investor landlord announced the sale of a large portion of its rental empire.

Landlord Mosser Companies defaulted on an $88 million 2018 loan underwritten by its 459 rental units across 12 buildings in San Francisco.

The company’s creditor has now hired real estate firm Cushman & Wakefield to sell the multifamily properties, The San Francisco Chronicle reports.

Mosser Companies took the blame pre-pandemic with low occupancy rates, but as the city by the bay grapples with a post-Covid doomsday, occupancy has increased as families move out to escape rising crime.

That, coupled with historically high interest rates as the loan matured, means Mosser and other real estate investors are looking to sell their assets.

Mosser Companies defaulted on an $88 million 2018 loan underwritten by its 459 rental units across 12 buildings in San Francisco.

Mosser Companies defaulted on an $88 million 2018 loan underwritten by its 459 rental units across 12 buildings in San Francisco.

The company's creditor has now hired real estate firm Cushman & Wakefield to sell the multifamily properties

The company’s creditor has now hired real estate firm Cushman & Wakefield to sell the multifamily properties

Homeless people are seen returning to the streets in the Tenderloins district near San Francisco's Moscone Center where the APEC conference was recently held

Homeless people are seen returning to the streets in the Tenderloins district near San Francisco’s Moscone Center where the APEC conference was recently held

“San Francisco has gone through a wave of distress in real estate due to the economic upheaval caused by the COVID years,” explained a spokesperson for Mosser.

And while the market recovery is underway, an enormous amount of real estate debt is coming due, creating a push to refinance loans that originated before the pandemic.

Adds: ‘It also comes at a time when both general vacancies and interest rates are historically high.’

The Mortgage Bankers Association estimates that $2.6 trillion in real estate loans nationally will come due by 2028, 38 percent of which are in the multifamily sector.

San Francisco also saw the sale of more than a third of its 24,000 rental units by multifamily landlord Veritas Investments after it defaulted on $1 billion in loans.

“It’s more about moving people out, increasing operating expenses, all the eviction moratoriums and rent increase moratoria — it just wreaks havoc on certain multifamily projects, especially when people have taken on short-term or floating-rate debt,” John Drachman, co. -founder Waterford Property Company, explained.

By January, occupancy at Mosser’s properties had dropped to 82 percent.

“This is why multifamily in San Francisco is suffering so much and you have these portfolios that have gone up for sale: multifamily has been hit with a triple killer, which is increased interest rates, lower occupancy rates and declining rents,” Nathaniel Touboul, a real estate partner at the law firm Allen Matkins, said.

A homeless encampment is seen along Leavenworth Street in the Tenderloin district, just a few blocks from Powell

A homeless encampment is seen along Leavenworth Street in the Tenderloin district, just a few blocks from Powell

Headlines with the phrases 'garbage city', 'ruined city' and 'rundown city' capture how crippling drug issues and widespread homelessness continue to be a problem for residents.

Headlines with the phrases ‘garbage city’, ‘ruined city’ and ‘rundown city’ capture how crippling drug issues and widespread homelessness continue to be a problem for residents.

The street then runs north for more than a mile along some of the city's most troubled areas, which, as the photos of the stripped storefronts show, are affecting businesses.

The street then runs north for more than a mile along some of the city’s most troubled areas, which, as the photos of the stripped storefronts show, are affecting businesses.

There, right outside the Nancy Pelosi Federal Building, drug dealers set up shop daily in full view of the public, with users vaping and smoking without interference from law enforcement

There, right outside the Nancy Pelosi Federal Building, drug dealers set up shop daily in full view of the public, with users vaping and smoking without interference from law enforcement

“In San Francisco, in 2018 and 2019, business was booming, people were paying top dollar for apartments, and vacancy rates were extremely low. At that time, nobody was underwriting vacancy rates and falling rents like those we experienced after the pandemic, Touboul said.

Adds: ‘What’s happening right now is really an illustration of and a reminder that San Francisco is ultimately a booming city, and real estate is cyclical in nature.’

San Francisco has become an international byword for urban mischief with the proliferation of open-air drug markets and an exodus of businesses, retailers and now residents.

Data from the Office of the Chief Medical Examiner showed San Francisco entered its deadliest year on record for drug overdoses with 752 accidental overdose deaths as of Dec. 6.

This is the highest year on record – 2020 – when 726 people died.

And the city stands to lose $200 million a year in lost tax revenue from its business exodus.

The famous thoroughfare runs for more than a mile along the city's controversial downtown, where open-air drug use is common

The famous thoroughfare runs for more than a mile along the city’s controversial downtown, where open-air drug use is common

The situation at Powell - located at one of the stops on the so-called 'Doom Loop' of Union Square, City Hall, and the Tenderloin and Mid Market - is indicative of the current state of the city, with Union being a hive of unsavory served.  post-pandemic activity on the street's terminus on Mark

The situation at Powell – located at one of the stops on the so-called ‘Doom Loop’ of Union Square, City Hall, and the Tenderloin and Mid Market – is indicative of the current state of the city, with Union being a hive of unsavory served. post-pandemic activity on the street’s terminus on Mark

San Francisco’s also has a woefully high office vacancy rate, which was 35.9 percent in December.

That situation is exacerbated by the departure of several major firms, including accounting giant KPMG, which announced earlier this month that it would leave its $400 million namesake downtown building.