Berkeley Student Housing Developer Files for Bankruptcy

Academy West Investments is hoping to delay an impending foreclosure in Berkeley by filing for bankruptcy.

The owner of the University Park Apartments made the Chapter 11 bankruptcy filing after defaulting on $28.3 million of debt, The Mercury News reported. The 97-unit property was headed to a foreclosure auction earlier this month over the loan provided by Terra Property Trust in 2023.

With the latest legal maneuver, the property owner, an affiliate of Academy West Investments, has thrown the possible foreclosure or lender seizure timeline into question.

An Academy West affiliate bought the five-story apartment complex at 1709 Shattuck Avenue in 2020 for $34 million. At the time Academy West bought the buildings, it planned to renovate the property to add more beds and improve amenities and aesthetics for residents. It took out a separate $26.5 million loan in 2020 to do so, and as of April of this year was reportedly in default for $29.9 million on all of its debts.

The complex is estimated to be worth $32.6 million today, according to the San Francisco Business Times. Academy West, an affiliate of Sunstone Development, specializes in student housing and apartment investments such as University Park. When the firm bought the complex, it hoped the proximity to the University of California, Berkeley campus would attract tenants like flies to honey.

Besides multifamily properties, hotels near the UC Berkeley campus and across the Bay Area have been facing foreclosure and bankruptcy proceedings. Kubera Hotel Properties, for example, fell into foreclosure for its University Inn & Suites property in Berkeley after defaulting on a $10.5 million loan from JPMorgan Chase in May. The hotel owner has since filed for bankruptcy.

The ownership fate of the University Park Apartments remains in limbo, though the picture should become clearer next month. A U.S. Bankruptcy Court in California set a hearing in early September to discuss the status of Academy West’s court filings in the case. The court also scheduled a meeting of the creditors next month.

— Chris Malone Méndez