A Los Angeles lender has sued Leap Development to foreclose on a stalled condominium project in San Francisco’s South of Market, which the city has declared a public nuisance.
Lone Oak Fund moved to foreclose on an affiliate of the South San Francisco-based developer, which ceased making interest payments on a $10 million loan tied to the dormant project at 360 5th Street, the San Francisco Business Times reported.
This month, City Attorney David Chui sued the affiliate, San Mateo-based 360 Fifth, for public nuisance over the water-filled development site marred by “graffiti, garbage, mosquito infestations and standing water.”
The affiliate led by Leap CEO Xiangxi “Terry” Song owes more than $1 million in fines related to the property, according to the complaint.
Lone Oak, an L.A.-based bridge lender led by Jerry Ducot and James Rothstein, is pursuing a judicial foreclosure after the developer ceased making payments late last year.
The lender asked the court to appoint a receiver to oversee the project site.
In 2019, the developer excavated the two-thirds acre site to build 127 condominiums, when such housing was hot. A year later and six months into the pandemic, the builder halted construction. The eight-story, $111 million project was never built.
The contractor, Thompson Builder, then filed a lawsuit claiming that Leap Development owed $5.8 million for its work. The developer denied the claim.
Since then, the property has become a neighborhood eyesore, according to the city.
Leap purchased the approved development site in 2018 from Dallas-based Trammell Crow Residential for $21.7 million, according to the Business Times.
In May, Leap defaulted on its $10 million loan linked to the abandoned lot at 360 5th Street. The previous summer, Leap listed the shovel-ready project site for an undisclosed price, according to a marketing brochure.
In its foreclosure suit against Leap, Loan Oak contends the $10 million loan tied to the property was also linked to another Leap-owned project in San Bernardino County.
That site was sold off at the end of last year, and $2.5 million in proceeds from its sale went toward paying down the $10 million loan, according to the complaint reviewed by the Business Times.
But Leap stopped paying interest on that loan in November last year, and then failed to repay the loan in its entirety when it matured in June. The lawsuit alleges a check written by Leap to Loan Oak was returned on account of insufficient funds.
— Dana Bartholomew
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