San Francisco apartments soar: Deal suggests 35 percent jump

San Francisco Business Times  - Tuesday, June 14, 2011 

Tribeca Cos. has sold an apartment portfolio acquired during the worst days of the recession, a series of transactions that suggest the value of multi-family buildings has jumped 35 percent in 18 months.

On June 10, Tribeca Cos. sold a nine-building, 155-unit portfolio in San Francisco to the Prado Group . The buidlings include choice properties in Cow Hollow, Pacific Heights, lower Nob Hill, and one in downtown Burlingame. Previously Tribeca had sold three other properties.

The sales were the final nine of 12 properties Tribeca, through affiliate partnership entity Sky Pacific Holdings II, LLC, acquired opportunistically through a loan purchase from lender UBS on Dec. 30, 2009. Tribeca paid $31 million and then foreclosed on the properties previously owned by the Lembi Group.

While purchase price was not disclosed for the individual sales, the aggregate sale price of all 12 properties came to $40 million, according to Tribeca.

The sale of the remaining properties reflects the healthy return of the San Francisco and Bay Area rental property market from the depths of the recession of the past two years, according to Tribeca.

“Following the original acquisition in a complex foreclosure process, Tribeca began our value-enhancement program of carefully managing and maximizing values, to prepare the properties for eventual sale,” said William Faidi, CEO of Tribeca. “The sale to Prado Group enabled us to quickly achieve our investment objective well ahead of our initial projected time-horizon."

The acquisition marks the second Lembi Group apartment portfolio acquisition by the Prado Group in the past nine months. In September 2010, Prado Group acquired four buildings totaling 250 units that had been taken back by lender UBS. Prado now owns 600 units in San Francisco and is breaking ground on two developments, 82 units at 2001 Market St. and 15 units at 1266 Ninth Ave.

“The Tribeca acquisition is exactly the type of high quality apartment assets we are focused on acquiring in the infill neighborhoods of San Francisco and the Bay Area. The recovery has commenced and San Francisco is poised to outperform the nation based on its strong economic base, creative class and little to no new supply,” said Craig Greenwood, a Principal at Prado Group.

Prado Group was represented by Toby Costello and Michael Thomas of Wheelhouse Brokerage.