A pair of planned San Francisco apartment towers just joined the city’s growing pile of distress.
Lender Arixa Capital has served Forma Development Design Management with notices of default tied to two downtown sites slated for residential high-rises, the San Francisco Business Times reported. The defaults cover a $9.3 million loan linked to 896 Folsom Street in Central South of Market and a $5.8 million loan tied to 777 Sutter Street in Nob Hill.
Forma purportedly failed to repay the debt when the loans matured, according to notices recorded earlier this month. The filings indicate the developer owed more than $17 million in total as of April 15.
The projects themselves had appeared to gain momentum. Forma proposed both towers in September 2024 and secured city approvals in July 2025. At the Folsom Street site, the developer plans to erect a 26-story, 130-unit apartment tower with ground-floor retail. The Sutter Street proposal would replace the former Fleur de Lys restaurant site with a 26-story, 36-unit residential building, also with retail at the base.
The approvals haven’t translated into construction starts. Developers across San Francisco continue to face an uphill battle as rents and condo prices lag behind the cost of building. Even with downtown foot traffic rebounding and investor sentiment improving from pandemic-era lows, the city’s development pipeline has largely frozen.
The notices do not automatically push the properties into foreclosure. Forma has at least 90 days to cure the defaults before lenders could move toward a public auction, though those timelines are often extended during negotiations. Neither Forma nor Arixa commented on the defaults.
Forma founder Walid Mando has already navigated trouble at the Folsom site before. The developer bought the parcel for just over $2 million in 2008, according to property records cited by the Business Times. A Forma affiliate then refinanced the site with a $2 million loan in 2017. In 2022, a previous lender served the developer with a notice of default for that debt; Forma resolved the default by refinancing the property with the current $9.3 million loan from Arixa.
The Sutter Street project also generated neighborhood backlash over its height, though Forma has leaned on state housing laws to limit local opposition and accelerate approvals there.
— Chris Malone Méndez
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