Veritas Investments, the real estate giant that owns thousands of housing units across the West Coast, has defaulted on $652 million in debt and is facing the foreclosure of 66 buildings in San Francisco, according to a Sept. 18 default notice obtained by Mission Local.
That may represent the entire San Francisco housing stock of what was once the city’s largest landlord. A separate Sept. 18 filing with the city describes the 66 buildings as the “Veritas SF Portfolio.”
Those 66 buildings house 1,566 units, according to a review of records with the San Francisco Office of the Assessor-Recorder. Because Veritas’ loan is secured by the buildings, all 66 could be sold at foreclosure within 90 days to pay off the debt, according to the notice.
The buildings range in size: The largest is the 116-unit, five-story Tenderloin apartment complex at 57 Taylor St. where tenants who sued Veritas in 2018 alleged lead contamination. The smallest are six-unit buildings in North Beach and Corona Heights.
Most are in the Tenderloin, Civic Center and downtown.
The “notice of default” was sent by First American Title Insurance Company to 66 properties owned by various LLC subsidiaries of Veritas. It gives Veritas until five days before a sale date to pay off its debt to lender RBC Real Estate Capital Corp., the real estate investment arm of the Royal Bank of Canada, and get into “good standing.”
The notice gives Veritas the option to work out a payment plan or ask for extra time. If it does not do either of those things, a “sale date may be set” no sooner than 90 days from the Sept. 18 filing date, which would be Dec. 17.
Veritas did not immediately respond to a request for comment. CEO Yat-Pang Au did not respond to a late Wednesday message.
If a sale were to proceed, a buyer would likely purchase the entire tranche of 66 buildings. Tenants would not face eviction, but their landlord would change.
The Veritas loan has an unpaid principal balance of $551 million that first came due in March 2024, according to the notice. Veritas also failed to pay $1.1 million in property taxes, according to the notice.
Veritas has faced serious financial strain in recent years.
It defaulted on $1 billion in loans in late 2023 and subsequently sold significant chunks of its real estate empire. In January 2024, it sold 2,150 units, reportedly a third of its San Francisco housing stock, for $464 million. Last year it sold another 762 rent-controlled units, and this March sold 1,770 units for $540.5 million.
Earlier this year, Veritas defaulted on a separate $450 million loan, according to the real estate news site The Real Deal.
After the 2024 sales, Veritas was dethroned as San Francisco’s largest landlord. Its CEO saw the irony at the time: He founded Veritas in 2007 and, after the housing crisis, made his mark buying foreclosed-upon properties.
“I got them in the same way that I lost them,” Au told The Real Deal last year. At the time, he said, he was plotting a comeback.
As a landlord, Veritas has long drawn the ire of tenant advocates. Many of its tenants have organized as the Veritas Tenants Association and withheld rent to improve housing conditions. Tenants have alleged harassment and neglect, and sued the company multiple times.
In 2022, its property management subsidiary warned residents in its San Francisco properties that they could be evicted for organizing by distributing “literature” and hanging signs on doors. Earlier this year, tenants who organized a rent strike at one of its buildings were reportedly threatened with eviction.
The Royal Bank of Canada has pursued San Francisco borrowers before. Its RBC Real Estate Capital arm in June 2024 took over 1,200 San Francisco housing units from owners Goldman Sachs and Ballast Investments after they defaulted on $687.5 million in loans.
This is a perfect case for leveraging mortgage revenue bonds for the City to acquire these distressed buildings at a discount for conversion into permanently affordable housing.
The mortgage revenue bonds are repaid mostly with rental revenue, and the City could offer up the increment as subsidy for tenants whose rents can’t contribute to covering their share of the note.
This is so much less expensive than new builds. But the corrupt affordable housing nonprofits who build new construction, and for whom every problem is a new build are vehemently opposed to any competing claims on “their” affordable housing dollars.
It would cost less than a rounding error on the monthly AI/crypto/robot car grift that’s going around SF like the clap right now and making life here still more unaffordable for those not in on the current con.
But it’s highly unlikely silver spoon Danny would become a class traitor and compete with his pac heights real estate pals for these a$$ets.
Oligarchs gonna oligarch. It’s what they do.
Offer to sell to tenants first then to low income residents of SF will end poverty!!
Because the city has such a good track record for managing its housing projects, right?
Better than YIMBYs.
Right!? The city has always shown itself to be soooo efficient at maintaining and managing real estate. Wrong
A private apartment building owner just ran 66 buildings into receivership.
Good opportunity for the city to start becoming the largest real estate owner like in Vienna. Time to think and act differently.
I don’t know if the city has the money, but I like this idea.
It’s literally investing in the city.
Also, while I suspect the city will initially put equity above everything else, including tenant security, eventually sensible people in city government may FINALLY notice that people’s feelings of security matter, and also that junkies from out of town aren’t the best citizens, and perhaps we should discourage them rather than constantly bending over backwards to give them whatever we think they need to enjoy their lifestyle at our expense.
Unfortunately the city is unable to act quickly enough to take advantage of this sort of sales, unless they’ve set aside funds in anticipation. IIRC they missed previous opportunities to purchase Academy of Art University properties that came onto the market when the city cracked down on it’s real estate empire.
@phays, people get paid good money to own this political portfolio and we’re supposed to believe that they were “unable” to articulate the apparatus to be capable of such acquisitions after decades of land trusting and small sites acquisitions and increasing tenant precarity?
Rent controls? What a joke. If you can’t afford it, you shouldn’t live there. Cities don’t offer mortgage payment controls or expense controls. You clowns have to realize that investors have to have funds available to pay the mortgage, tax, insurance, repairs, operating costs and then profits. Rent control stops almost all of this. Imagine owning a daycare and the city telling you what you can charge. Stupid people (broke) think its ok to think like this.
Veritas knew going in that they were acquiring many rent-controlled buildings–actually touting this on their original website. No surprises there, and they should not have paid way over for these properties in the same way that CitiApartments (the Familia Lembi) did.
Learn how rent control works. You have no idea.
This not what Vienna does. Vienna provides governement backed bond to support non-profit groups that build and manage mixed income housing, and the tenants (and at times owners or long term lessors) have input or at times ownership of the non-profit groups.
And the key point is that this is not “low income” housing, It’s mixed income, mostly middle class housing,
There are models for publicly owned low income housing (see HKHA in 🇭🇰) but it’s not Vienna. And these models when successful come with a great degree of control – and security -over what residents do.
Terrible idea. Vienna can do this, because they have a culture of actually preserving the housing stock and managing it in good faith. San Francisco, we have a culture of grifting.
But so do developers. It’s the only way low income housing will ever be built despite the lies of the YIMBY cultists.
The answer is to pay people properly. Adjusted for inflation, GDP has doubled since the 80s while middle class incomes have stagnated to the point they (we) are low income now. So teachers can “compete” and go out and find housing on the open market instead of the City building housing. Incomes keeping up with GDP and productivity growth would also mean that new housing built translates into more housing attainable for the “average” buyer. Of course, all this won’t happen any time soon, things keep accelerating in the opposite direction actually.
Sure go ahead and 500% everyone’s pay, that’s “a” solution.
Guys,
What about that 300 million from Prop A was it that Breed wouldn’t spend and Lurie was trying (did he succeed when I was stoned?) to peel 30 million of off for one of his nonrelated projects ???
Could we in some case end up owning 30 buildings free and clear to place into SF Land Trust ?
go Niners !!
h.
My building is on this list, and initially I was pleased about it. But then a tenant from a nearby building which was in default earlier told me her building was then bought at a deep discount by a GreenTree LLC, Yat-Pang Au’s property management arm. So there’s no improvement at all in the lives of long-suffering tenants. AI is being used to “manage” the building, as it is with mine.
Maybe it’s time for another deep dive into Veritas’ business practices. A lot of people are affected by them.
Methinks this will be an recurring problem as long as rental housing remains a “free-market” commodity for speculators ….
EXACTLY.
Could SF pass rules limiting how many buildings or units a corporation can own? I feel like housing should be for people to live in and not corporate portfolios. Would this help tenants more than it hurts development money?
BOS, Tenants /tenant laws made it too hard for mom & pops to own/run these buildings, so their only way out is to sell to corporations, now you complain about the corporations owning too much! You drive it into thier hands when you made it impossible for people to own & manage them. The laws are just ridiculous for the average owner.
Truth is, too many of the units in these buildings can’t keep up with the cost of maintenance and the tenants always vote for more bonds that ‘someone’
has to pay for.
Hopefully some of these buildings get demo’d due to all the ridiculous tenant laws. Assuming they can’t keep up with the financial burden due to the low rents?
As for the City owning them, no thanks – we don’t need more leaches on the City teet. Remember, these units are not means tested, millionaires live in them too, and the situation actually encourages a subsection of people to think they’ll have ‘low rents forever’,
Liberating these (and all) units in S.F. to market rate, will flood the market and bring rents down massively. Yes it will.
Sure a few people loose, but the city overall becomes less expensive when everyone pays their fair share (and not thier grandmas rent from 1960 something).
Our 6-unit bldg was purchased by 2 partners in 2021. In the 16 years I’ve lived here it’s changed ownership 3 times. 2 out 3 owners are mom and pop.
This is only 1 data point but it sweeps away your evidence-free claim. You sound like every whiner on SF Nextdoor, pining for a return to a past that never existed.
Both are entirely possible and likely.
Made me think of the old CitiApartment folks and their antics years ago.
Vacancies occurred city-wide when people left San Francisco during Covid – but that doesn’t matter to lenders …. They just want their payments on time! Foreclosures normally take 90 days after the defaults, so time will tell if
Anyone steps up to “rescue” Veritas.
The City, State, or even Mercy Housing corp. should swope up these properties, and put them under section 8.
Couldn’t there be a better way to monitor what real estate companies are doing here? Why are they being allowed to own so many buildings if they can’t pay their debts?
Veritas is hated by residential tenants.
And the lawyers who represent them, the few who can afford to fight them.
Those buildings will fall into disrepair.
So called “affordable housing” has to be subsidized mainly by the government which is going bankrupt by the day.
People not paying their bills – company goes bankrupt hooray, hooray – you say. All the improvements go away.
People paying their rent, but landlord not doing repairs because they are greedy. Anyway, instead of building high rises along the Geary Corridor, the CIty, State or even Mercy Housing Corp. should snap up all those units, for low income housing or section 8.
JOE RIVANO BARROS SENIOR EDITOR – spent time at YIMBY Action… what exactly does this mean? If covering stories on real estate, which is incredibly relavent to San Franciscans, he has a connection to YIMBY (yes in my back yard) how can he give an unbiased story? I’m smelling a bit of “Tom Brady” here…
Josephine —
Yes, Joe’s time at a former job definitely plays a major role in what the linked documents say and on the well-documented history of the landlord in question.
What does Tom Brady smell like? I figured it’d be Axe Body Spray, but now I can just ask Joe, I guess.
JE
Brady’s smell ?
Money, fine women and championships I’d guess.
Altho, with his plastic surgery I didn’t recognize him.
I musta missed the time when the Progressives were boss.
Gimme Sanders for prez and AOL for VP.
go Niners !!
h.
Got to love progressives in the comments, thinking they can just snatch “cheap” buildings from private investors to continue subsidizing lazy and mentally ill drug addicts at the expense of taxpayer dollars. You want a place to live, get a job, and buy it just like every other person in this country. Rent control and subsidies have resulted in SF buildings deteriorating and falling apart because no landlord will invest in real estate unless they can recoup their costs. This is the reason some day half of SF will burn down due to the inability to upgrade, retrofit and maintain buildings! What a bunch of bozozs!
No surprise there! This is all the aftermath of tenant non-payments during COVID and horrific rent control laws! Instead of helping landlords with mortgage payments, CA and SF gov passed tenant protections, resulting in landlords’ inability to collect full rent or evict non-paying tenants for years, affecting landlords’ income streams, ability to repair buildings and pay their own mortgages and other financial obligations. Get rid of progressivesf! They ruin our cities and communities!
No one forced them to buy the previously distressed properties that a couple of flips prior belonged to the Lembi Mob.
Yikes, no doubt you would turn dying people in a pandemic out on the street to boost your “income streams.” Other landlords withstood it. If you can’t handle rent control laws then get out of the business!
So true!
Given all the down votes just shows people have no concept of reality.
Or maybe you both don’t know what you’re talking about.