Douglas Wilson Takes Over Parkmerced

The court-appointed receiver of San Francisco’s largest multifamily community has taken it over, almost a year after owner Maximus Real Estate Partners first defaulted on $1.8 billion in loans.

Douglas Wilson Companies has assumed control of Parkmerced, located in southwestern San Francisco next to San Francisco State University, and plans to invest more than $70 million into the 3,221-unit, 152-acre property “to address immediate health and safety issues and to stabilize the community, which is currently 80 percent leased,” according to a news release from Douglas Wilson.

The receiver has been “given authority from the Superior Court and substantial capital from the lender to immediately focus on repairing and replacing health and safety deficiencies, including inoperable elevators, interior and exterior lighting, water intrusion, and mold issues,” CEO Douglas Wilson said in a statement.

In a follow up interview with The Real Deal, Wilson said conditions at the property were not as “awful” as he had expected, though he has a “laundry list” of several dozen items that will take up the $70 million supplied by the lenders. About $50 million will go toward immediate improvements, he said, including $5,000 to $10,000 per unit that the company is trying to turn over at an expected rate of 50 to 75 units a month to increase occupancy.

The rest of the changes would be spread out over the next 18 months to two years that he expects his company to control the property, he said. At that point, it could be sold through a receivership sale or Maximus, who still owns the property, could bring in more capital.

“Whatever happens, we want to make sure it’s vastly improved, and we’re going very quickly as a part of that,” Wilson said. “We’re kind of a SWAT team.”

Maximus refinanced the property in 2019 with $1.5 billion in senior financing from Barclays and Citi — packaged into commercial mortgage-backed securities deals — and a $275 million mezzanine loan from Aimco, which has since been sold at a loss.

San Diego-based DWC has brought on Brick + Timber, an affiliate of the San Francisco-based real estate firm Ballast, to manage the community of over 8,000 tenants. They have already begun overseeing leasing activities and tenant relations, according to the release. Wilson said his firm interviewed several property management companies but decided on Ballast because it is, “a smaller company that’s well-respected in the city.”

Ballast has been active in the distressed apartment market in the city since the pandemic; they were part of one of San Francisco’s biggest apartment portfolio buys in partnership with Brookfield, but also handed back 82 apartments from a partnership with Goldman Sachs.

DWC will also work to preserve the entitlements of Parkmerced’s current redevelopment plan for future developers. The city approved the first phase of the plan in 2015. The eventual goal is to add more than 8,000 new residences, along with accompanying retail, office and amenity spaces.

“There’s such value in those entitlements. What a great opportunity for the city to add infill housing in a location with those amenities that are already so close,” Wilson said, citing the proximity to parks and Lake Merced.

Thus far, the response from the city, including Supervisor Myrna Melgar’s office, has been “very welcome,” Wilson said.

“It’s gratifying when you are trying to do the right thing and have a little wherewithal to do it,” he said.