Fortress Investment Group is on a San Francisco Buying Spree

Fortress Investment Group is poised to pick up a 12-unit apartment building in San Francisco’s Hayes Valley after quietly scooping up six multifamily properties across the city for $32.9 million.

The New York-based private equity firm is close to acquiring the three-story building at 452 Oak Street after buying a loan secured by the building in February and then serving its unidentified landlord with a notice of default, the San Francisco Business Times reported.

The move comes after Fortress bought up six apartment buildings with 97 units across the city over the past seven months for $32.88 million. The combined deals work out to $338,969 per unit. The sellers were undisclosed.

The firm’s latest purchase was a 22-unit building at 1048 Union Street this month for $9.45 million, or $429,500 per unit.

It was preceded by an 18-unit building at 1249 18th Avenue in February for $5.85 million and a 15-unit building at 95 Cervantes Boulevard in January for $5.63 million.

In December, Fortress acquired a 15-unit building at 1290 Jackson Street for $3.95 million and a 15-unit at 1371 Jackson Street for $4.95 million.

The buying spree began in August, when Fortress picked up a 12-unit building at 400 28th Avenue for $3.05 million.

Fortress tapped local firm GreyBrick Partners to operate the six multifamily properties, according to an unidentified source.

Fortress Fortress is optimistic about a rebound in Downtown and the fundamentals of its commercial real estate market, a source familiar with the deals told the outlet.

While rents in San Francisco haven’t returned to levels before the pandemic, the market has been heating up.

Rents rose 2 percent year-over-year in the fourth quarter, according to Cushman & Wakefield. Vacancy fell 0.3 percent to 5.7 percent over the same period.

Fortress Investment Group, founded in 1998, as of December had $49 billion of assets under management, according to its website. This month, it paid $381 million for 24 apartment buildings with 1,446 units in the Netherlands.

A year ago, Fortress bought a $22.2 million loan tied to a 40,100-square-foot office building at 660 Market Street in San Francisco’s Financial District, allowing it to potentially take control of the property.

— Dana Bartholomew