Academy West’s Berkeley Apartments Headed to Foreclosure

A Berkeley apartment complex one block from the University of California’s local campus is heading to a foreclosure auction.

Academy West Investments, a student housing and apartment investment affiliate of Aliso Viejo-based Sunstone Development, defaulted on payments on a loan tied to the 112-bed University Park apartment complex and a neighboring structure, the San Francisco Business Times reported.

The complex, consisting of buildings at 1709 Shattuck Avenue and 1710 Walnut Street, is estimated to be worth $32.6 million, while the remaining principal sum of the loan linked to the property is about $31.8 million, according to Alameda County officials. Academy West, a multifamily and student housing investment company, bought the property in 2020 for $34 million.

At the time Academy West bought the buildings, it planned to renovate the property to add more beds and higher-end touches for residents. The company took out a separate $26.5 million loan in 2020, and as of April of this year was reportedly in default for $29.9 million on all of its debts.

Multifamily property owners in the East Bay have been navigating rough waters in recent months, as several properties have either gone back to lenders following loan defaults or sold for deep discounts compared to what their former owners paid.

In June, Oakland-based developer oWow returned its apartment building at 1919 Market Street in West Oakland to its lender, Boston-based UC Funds, in a deed-in-lieu-of-foreclosure deal. Signature Development gave back the 241-unit Orion Apartments at Brooklyn Basin in April to lender UBC Realty, also via a deed in lieu of foreclosure.

At the top of the year, The Martin Group bought a 224-unit property at 1889 Harrison Street in downtown Oakland for $61 million, or about half of its assessed value, the Business Times reported. In December, Three Steps Properties bought the 254-unit apartment building at 447 17th Street for $99 million, an approximately 53 percent drop from its assessed value.

The Academy West complex in Berkeley will be auctioned off Aug. 14 at noon at the Alameda County Courthouse.

— Chris Malone Méndez