Parkmerced Redevelopment Sites Seized in Foreclosure

A New York real estate firm tied to Israeli-Cypriot billionaire Yakir Gabay has taken control of a chunk of Parkmerced through foreclosure, adding a new owner to the San Francisco mega-development.

Yellowstone Real Estate Investments CEO Issac Hera announced Sunday that the firm had completed the takeover of four parcels at the 152-acre community next to San Francisco State University, first reported by The Promote. The sites, covering the first four subphases of a long-delayed redevelopment plan, are entitled for nearly 1,700 units.

The foreclosure stems from a $101 million construction loan Yellowstone originated for Maximus Real Estate in 2022. By the time of the sale, the debt had grown to more than $199 million with interest and fees, according to a trustee’s sale notice. Yellowstone used three $10 million credit bids to acquire the properties, according to Matthew Parrott, an attorney at Fried Frank who advised the firm on the foreclosure.

The takeover is separate from the larger debt crisis engulfing Parkmerced. Most of the property is tied to a $1.5 billion senior mortgage and $275 million mezzanine loan that matured in default late last year. A court-appointed receiver now oversees that portion of the complex after its appraised value fell roughly 34 percent from the time of the 2019 refinancing.

The foreclosure marks a significant shift for a redevelopment project that was supposed to more than triple Parkmerced’s housing stock to more than 5,600 units, with new retail and Muni M line stops. The redevelopment was approved in 2011 and slated to begin in 2016 but never broke ground amid the pandemic and Maximus’ repeated financial troubles.

Yellowstone has been building a portfolio of distressed real estate across the country since its founding in 2020. Just how fast it will move to act on its newly acquired portion of Parkmerced and its entitled housing development will be closely watched.

Editor’s note: The Promote was not initially credited as the publication that broke this news.

— Chris Malone Méndez