CORRECTION (March 25, 1:38 p.m. EST): A previous version of this story incorrectly identified the entity that filed for bankruptcy. The post also incorrectly named the apartment complex and incorrectly stated RAD’s loan obligations.
Oakland-based NGI East Bay Portfolio LLC, which owns 40 percent of a 236-bed apartment complex in Berkeley, filed for bankruptcy, according to documents filed with the Securities and Exchange Commission. The apartment has $47 million worth of loans issued by Switzerland-based UBS AG.
The borrower on Garden Village Apartments is Dwight Neun Owner, LLC, which traces back to Randy Miller and Anthony Levandowski, who are co-founders of Oakland-based RAD Urban. The original loan amount was $35 million with a mortgage rate of 4.9 percent, and the building also has two mezzanine loans totaling $12 million. The loan was first issued in June 2017 and was set to mature in May 2027.
NGI’s filing will not affect the building or the loan on the building in any way, according to Miller.
Garden Village is a 77-unit student housing building located at 2201 Dwight Way in Berkeley. It features 18 buildings that are connected through open-air walkways. The apartment complex is half a mile away from the UC campus and downtown Berkeley.
About a year ago, a Fremont apartment complex was acquired after the original owner filed for bankruptcy. Fremont Hills Development filed for bankruptcy on Mission Hills Square, and it was acquired by Los Angeles Parkview Financial for $40 million.
More recently, the Bay Area commercial market has been in a state of distress with loans on commercial properties either defaulting or being in danger of defaulting. Redco Development defaulted on their loan for 1 Montgomery Street in San Francisco, having purchased the building for $84 million in 2019. Veritas defaulted on a $450 million loan for 62 multifamily properties in the bay area. Also, Shorenstein was in danger of defaulting on the $400 million loan on the Twitter building, but was mysteriously paid off before it matured.
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All types of commercial buildings are feeling the distress in the market. The two largest Hilton hotels in San Francisco had their $725 million in CMBS loans downgraded by Moody due to uncertainty that they will meet their financial obligations by the time the loans matures.
This upheaval in the market could be attributed to the rapid rise in interest rates.
“All property sectors across commercial real estate with maturing loans are going to face some level of refinance stress because interest rates have shot up so quickly in such a short amount of time,” Michael Che from Fitch Ratings, said at the time of the Veritas default.