Oak SF wants to convert Hayes Valley condo complex into apartments

SoCal developer bought construction loan tied to the vacant 109-unit project for $77M

Oak SF aims to turn a troubled 12-story condominium complex near San Francisco’s Hayes Valley into apartments.

The Ontario-based developer led by Steve Hong has filed plans to convert the 109 Oaks, a vacant complex built by disgraced Chinese developer Zhang Li, into rental housing at 1554 Market Street, the San Francisco Business Times reported.

Li’s Z&L Properties built the condominiums two years ago between Hayes Valley and Civic Center, then halted its Bay Area projects after the developer became the center of a corruption scandal that sent Mohammed Nuru, former head of the city’s Public Works Department, to prison.

While Z&L, based in Foster City, owns the two-building complex, Hong’s Oak SF bought its construction loan last month for $76.79 million. 

The loan, made by Massachusetts Mutual Life Insurance in 2019, was set to mature in July of last year, with an undisclosed extension. It’s not known when the new loan tied to the property will mature.

Hong told the Business Times that Oak SF is foreclosing on the loan and intends to take ownership of the Oak.

Its conversion to apartments would require approval from the San Francisco Planning Commission, Dan Sider, chief of staff for the city’s Planning Department, told the newspaper.

Sider said his department is “tremendously concerned with any project that is complete, ready for occupancy, but sitting vacant.

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“We want to move this forward,” he said. “We’ll try to get this to the Planning Commission as quickly as possible.”

The Oak’s opening depends on when the city could grant approval, Hong said.  As an apartment building, the Oak would offer up 13 units of affordable housing, according to application documents filed with the city.

As of last year, a dozen condominiums at the Oak had been sold, according to the San Francisco Chronicle. The status of those buyers’ deposits isn’t clear.

Zhang, co-founder and owner of Guangzhou-based R&F Properties, is worth $1.5 billion while company assets top $53 billion, according to Forbes. Last summer, he admitted to bribing Nuru with food, drinks and more.

Prosecutors agreed to drop a charge of conspiracy to commit wire services fraud in three years if Zhang acknowledged the crime and paid a $50,000 fine related to a kickback scheme to expedite a mixed-use condominium project at 555 Fulton Street.

Early this year, Z&L Properties listed a 640-unit luxury condominium project in San Jose, and sold the retail and for-sale homes at 555 Fulton, in Hayes Valley not far from the Oak, to the same buyer this fall.

— Dana Bartholomew

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