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San Francisco

Aaron Chang buys SF’s Hayes Valley condos, not Trader Joe’s site

Owner Z&L Properties looks to sell grocery space while dealing with bribery scandal

Z&L Properties' Zhang Li and 555 Fulton Street in San Francisco
Z&L Properties' Zhang Li and 555 Fulton Street in San Francisco (Fulton 555 SF)

The reported sale of a block of condominiums and a future home for Trader Joe’s in San Francisco’s Hayes Valley, at the center of a city corruption case, was only half true.

While the embattled Z&L Properties sold 18 condominiums at 555 Fulton Street, it did not sell the 16,700-square-foot grocery store space, as was previously announced by Supervisor Dean Preston, the San Francisco Business Times reported.

New York investor Aaron Chang, head of Fulton 555 Residential and an officer at San Jose-based Avery Bays Real Estate Development, bought the 18 unsold condos for $12.5 million.

Z&L is still working to sell the market storefront to Chang, unidentified sources with direct knowledge of the transaction told the Business Times, describing it as a more “complicated” transaction than the homes.

The Trader Joe’s opening at 555 Fulton was expected earlier this year. 

In April, Preston announced the impending sale, including the Trader Joe’s storefront, calling it an “important milestone” in a yearslong effort to make the Hayes Valley grocery a reality. 

Z&L, led by Chinese owner Zhang Li, bought the 555 Fulton site in 2015, but the 139-unit project was plagued by delays city officials blamed on the developer. After it won approval, the company ran afoul of city planners for redesigning the building without city permission.

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The five-story building is involved in a City Hall corruption case against former San Francisco Public Works chief Mohammad Nuru, who was sentenced last summer to seven years in prison after pleading guilty to honest services wire fraud involving bribery and kickbacks.

Li was arrested in London in December on suspicion of a kickback scheme involving Nuru to advance the 139-unit project. He was released to house arrest after posting bail of $18.5 million, and now faces extradition to the U.S.

Meanwhile, Z&L Properties has struggled to complete projects in San Francisco and San Jose.

In San Francisco, Z&L owed $2 million in back taxes on The Oak, a boarded-up 109-unit condo project at 55 Oak Street. 

In San Jose, unbought condos in the firm’s new 640-unit luxury complex at 188 West St. James Street in Downtown have been put up for sale for a combined $300 million.

The financially troubled Z&L has been written up for code violations in San Jose, and faces a $1,000-a-day fine for neglecting a historic church at 43 East Saint James Street. 

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— Dana Bartholomew

Companies and People
Avery Bays Real Estate DevelopmentZ&L PropertiesAaron ChangDean PrestonZhang Li