Veritas buys Polk Street apartment complex for $33M

In the priciest market-rate apartment building sale in San Francisco this year, Veritas has purchased a half-block-long 42-unit Russian Hill property for just over $33 million, according to property records. The deal closed in early October but the buyer has not been reported until now.

Dan McGue of Coldwell Banker Commercial Realty repped both sides of the deal between Veritas and Polk and Green Investments, which had owned the 1913 property for more than 60 years. McGue could not confirm the buyer but said via email that they were interested in the property’s “AAA location” on a popular block of Russian Hill, plus its rehabbed units, seismic upgrades and remaining upside.
There were multiple offers on the property, which McGue marketed without an asking price in the spring. The long-time owners decided to sell because they self-managed the property and were “getting up in years, so they wanted to spend their time in other ways,” he said.

Veritas, one of the largest residential landlords in the city, entered into an agreement to buy the 50,000-square-foot property in May, according to property records. In addition to 38 one-bedrooms, four studios and an eight-car garage, the two buildings at 2222-2254 Polk Street have five retail spaces on the ground floor leased to corner tenant Cole Hardware, Italian restaurant Fiorella, Korean dining spot SSAL and Philz Coffee. Vacant residential units have hardwood floors, renovated kitchens and bathrooms and are asking $3,500 and up in rent, according to listings on RentSF Now, well above the city’s current $3,000 average for one-bedrooms.

Veritas did not respond to a request for comment. The building at 2242 Polk Street was purchased by an entity called 2242 Polk LP, but Veritas is named in the May purchase agreement and CEO Yat-Pang Au’s name is on the $23 million loan on the property from East West Bank, according to loan documents.

While agents report that apartment buying has slowed to a crawl due to higher interest rates, Veritas has continued purchasing properties this fall and is also moving forward with its first-ever apartment development on a parking lot it owns downtown.

The sale is by far the biggest trade for a market-rate apartment building this year, though Related Companies sold its 3-acre Mission Bay affordable housing complex, Crescent Cove, for $96 million in April. Before this sale, the biggest close on a market-rate multifamily was an Alamo Square property that went into contract in May and sold for $18 million in August, or $430,000 per unit. The Polk Street property’s $33 million price tag translates to about $785,000 per residential unit, though it also has ground-floor commercial spaces on a well-trafficked commercial corridor, which the Alamo Square property does not.