Academy West Defaults on $28 Million Berkeley Housing Loan

Academy West Investments placed a bet on student housing in Berkeley — and lost.

The unit of Aliso Viejo-based Sunstone Development led by Blake Wettengel and Tanya Muro has defaulted on a $28.3 million loan linked to University Park, a 97-unit student apartment complex at 1709 Shattuck Avenue, the San Jose Mercury News reported.

Academy West, the student housing and apartment investment affiliate of Sunstone, bought the five-story complex in early 2020 for $34 million.

The startup company believed the 112-bed complex was a value-add opportunity that offered investors the chance to boost rents through wide-ranging renovations and adding new beds, the company stated at the time.

Academy West was also betting on long-term housing supply constraints around the UC Berkeley campus.

“We thought the location of the property was unsurpassed since it’s within a two-minute walk to campus and near downtown, a major transportation center, and an arts and cultural district,” Muro, co-founder of Academy West, said in a statement after the purchase.

“We are excited about the potential of additional buildings and improvement of our units that we anticipate will command premium rents considering the demand for luxury housing within this highly desirable market,” she said.

The University Park loan default is not the only East Bay complex facing financial strife, according to the Mercury News.

This month, lender UBS Realty Investors seized Orion, a 241-unit apartment complex in the Brooklyn Basin on the Oakland waterfront.

In November, a company bought a delinquent loan, then foreclosed on a 204-unit apartment complex at Telegraph Avenue and 51st Street in Oakland.

Two months prior, lender CIM Group took control of Bayview, a 186-unit apartment complex in Emeryville, through a deed in lieu of foreclosure.

In August, a lender seized a 206-unit, 24-story apartment tower at 1700 Webster Street in downtown Oakland after its owner failed to pay a $90 million loan. Last month, Three Steps Properties picked it up for $78 million.

Sunstone Development, founded in 2021 by Wettengel and Muro, has bought or built multifamily properties in Reno, Nevada, Kentucky, Utah and Arizona, according to its website. It’s also invested in hotels.

Two years ago, the firm picked up two side-by-side hotels next to Disneyland in Anaheim for a combined $20.6 million.

— Dana Bartholomew