
David Chesnosky, Mirella Webb and Mark Bonn with 901-903 Pine Street in San Francisco (Kelly Vorves Photography, Compass, OpenHomes Photography)
Deferred maintenance. Language barriers. Out-of-town owners. An ongoing eviction. The sale of 901-903 Pine Street in Lower Nob Hill had all the markers of a hard-to-close deal in San Francisco’s still-recovering multifamily market.
“Everything about this transaction was difficult from beginning to end,” said listing agent Mark Bonn of Compass Commercial, who co-listed with Mirella Webb.
But after a summer-spanning escrow period, the 1908 apartment building finally sold for $14.3 million in August after receiving multiple offers in May, the second-biggest apartment deal in the city this year after the $18 million sale of an Alamo Square building last month.
The local buyer plans to renovate the 37-unit property’s 15 vacant units, according to the buyer’s agent, David Chesnosky, also of Compass Commercial. Chesnosky would not identify the buyer, who is hidden behind a Delaware-based LLC, with a primary address on Commercial Street in downtown San Francisco and a secondary one in Henderson, Nevada outside Las Vegas, according to public records.
For some buyers, the high vacancy rate in the nearly 30,000-square-foot building would be an issue, said Chesnosky. But not for his clients, with whom he has worked before in his primary role as a leasing agent. They saw the upside of renovating the empty apartments with new kitchens and bathrooms, he said, and exploring whether the units, which are larger than most downtown rentals, could have additional bedrooms added before putting them back on the market.
The previous long-term owners may have been able to let them sit unrenovated and vacant through the down rental market, he said, but the new owner, “with the amount of money that they paid, they’ve got to get them filled.”
The new owner had the highest offer and best terms out of the five received from “all the big local owners you might expect to buy a building of this size,” Webb said. They paid close to $390,000 per unit for a mix of studios, one-bedrooms, two-bedrooms and a single three-bedroom.
Post-Covid price
Peter and Izabella Kiretchenko have owned the property since 1998, according to public records, when they bought it for $4 million. At that time they listed a Tiburon address on the deed paperwork, but the family now lives in Los Angeles and plans to trade the proceeds from the sale into shopping centers, the listing agents said. They do not own other multifamily properties in San Francisco, they said. In addition to living out of town, the owners are Ukrainian, the agents added, and the language barriers led to struggles over communicating with them about how to price the property.
They listed the property at $16.9 million because the sellers told them they got an offer at that price before the pandemic. They cautioned the sellers that the listing would probably sell for less given the lower rents in the area and the considerable deferred maintenance on the building, which still has its century-old “birdcage” elevator. It broke during the sales period, adding to the litany of complications.
Even after the highest offer came in at $14.5 million, it took some convincing to get the owners to accept it, the agents said, adding that the myriad issues that came up during inspection required a $200,000 credit to the buyers.
“I think we’re just in this time of the market where some people are still expecting the pre-Covid numbers,” Webb said, especially with rents on the rebound and multiple offers coming back for apartment listings. But rental increases have varied considerably by neighborhood and the Lower Nob Hill location is not as desirable as buildings in the northern neighborhoods such as the Marina, Pacific Heights and Cow Hollow, or near Golden Gate Park’s panhandle like NoPa and Alamo Square.
There was also an ongoing eviction action at the property, which needed to be resolved before the new owners would take possession. That tenant left before close as promised, as did the resident manager, who required a “tricky negotiation” to leave so that the new owners could bring in their own manager, said Bonn, th4e listing agent.
Taylor Lembi — grandson of Frank Lembi, whose CitiApartments was one of San Francisco’s biggest landlords before losing much of its portfolio in the 2008 financial crisis — will handle the property management of the building for the new owners, Webb said.
Under new management and with major renovations in both individual units and “tired” lobby and common areas, Webb said she looks forward to seeing what the building will become.
“It could be such a beauty and it was just not,” she added.
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