Signature Development Hit With Distress on Oakland Apartments

A Signature Development affiliate is in default for a loan tied to an apartment building in Oakland.

The affiliate was served a notice of default for the debt behind Mason at Hive, a 105-unit building at 2350 Valley Street in Uptown Oakland, the San Francisco Business Times reported. The investor-owned entity managed by Signature defaulted on a $39.8 million loan originated in 2016 and modified in 2020. It still owes $1 million on the loan.

Foreclosure could be imminent as a result of the default. Building owners have 90 days from the notice of default to repay.

The building was developed in 2015 as part of a larger project, The Hive, which turned a seven-building former car dealership in Uptown Oakland into offices, retail and restaurants. When the apartments opened for rent, residents quickly moved in, the outlet reported. Its assessed value as of last month is about $24 million, or $228,600 per unit.

Signature Development is working with the lender and investor group to reach a solution, company founder Mike Ghielmetti told the outlet, though he noted “Oakland has experienced a slow and anemic recovery from the effects of the pandemic” and, as a result, the developer is “subject to market forces.”

Signature initially was entitled for 367 units of housing at the site with plans to build a high-rise, but the Oakland-based firm changed course after the 2008 recession. It instead opted to pursue a mixed-use development.

The distress could add to a string of multifamily properties in Oakland going back to lenders or selling in a short sale. In April, Signature turned over the Orion Apartments at Brooklyn Basin to its lender via deed in lieu of foreclosure after racking up $138 million in debt and interest on the property.

Last December, Three Steps Properties bought the 254-unit building at 447 17th Street for $99 million, representing a 53 percent drop from its assessed value. Quarterra, a subsidiary of the Lennar Corporation, owned that property and took out a $97 million loan in 2020.

The following month, The Martin Group bought 1889 Harrison Street in downtown Oakland for $61 million, or about half of its assessed value. Quarterra also took out a $70 million loan on the property in 2021.

In June, Oakland-based developer oWow gave back 1919 Market Street in West Oakland to its lender via deed in lieu of foreclosure. At the time, there was $50 million in debt on the 102-unit property, dwarfing the building’s $40 million assessed value.

— Chris Malone Méndez