Leap Development has defaulted on a $10 million loan linked to a half-acre lot approved for a 127-unit housing complex in San Francisco’s South of Market.
360 Fifth LLC, a unit of South San Francisco-based Leap, defaulted on the loan tied to the eight-story, $111 million project that never broke ground at 360 5th Street, the San Francisco Business Times reported.
Leap, which demolished an on-site building, has not made its monthly payment on the loan since the end of last year.
The developer bought the approved development site in 2018 from Dallas-based Trammell Crow Residential for $21.7 million
The following year, Leap took out the $10 million, interest-only loan from an unidentified lender. In June, it refinanced the loan from the same creditor.
In August, the developer listed the shovel-ready project site for an undisclosed price, according to a marketing brochure. Colliers, which holds the listing, declined to comment to the Business Times.
The Leap subsidiary, San Mateo-based 360 Fifth, was slated to go before San Francisco’s Assessment Appeals Board this week to contest the assessed value of the site. Leap wants to reduce the assessed value of the eight parcels that make up property by 50 percent, according to public documents.
The market for multifamily projects in San Francisco has become a challenge for developers.
While rents in the city have been stagnant, the cost to build new housing in the city has soared. An analysis by the city Controller’s Office last year said it didn’t make financial sense to build apartments or condominiums in San Francisco.
The city has since lowered affordable housing requirements, though it’s not clear that is enough to get pipeline projects unstuck in San Francisco, according to the Business Times. Higher interest rates and construction costs have prevented projects from breaking ground.
Leap, founded in 2017, has an expired website. State business records tie both the firm and its subsidiary to Xiangxi Song of South San Francisco.
Two years ago, what were once artist studios at 360 Fifth Street had become a swimming pool-sized, fenced-in hole in the ground, excavated for 127 apartments but left for years to fill with rain water, the San Francisco Chronicle reported.
Excavation for the foundation was completed, then construction halted in early 2020. The contractor, Thompson Builder, then filed a lawsuit claiming that the developer, Leap Development, owed $5.8 million for its work. Leap Development denied the claim.
— Dana Bartholomew
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