Tribeca Sells Multifamily Assets Acquired through Loan Purchase in 2009

San Francisco–Tribeca Cos., a private-equity real estate investment firm, has sold nine of the 12 properties–eight multifamily and one retail–that it acquired through a loan purchase from lender UBS in late 2009, after which it immediately acquired the title through foreclosure of the properties, which were previously owned by the Lembi Group. Tribeca acquired the 12-building Lembi portfolio loans for about $31 million, and after acquiring the title, subsequently sold three assets in 2010.

The nine properties in the 2011 sale went to a series of single-purpose entities of the Prado Group of San Francisco, a private real estate investment management and development firm. Neither buyer nor seller disclosed the 2011 purchase price, but according to San Francisco-based Tribeca, the sale price of those first three properties plus the nine properties now closing came to a total in excess of $40 million, and that the company is realizing an aggregate return of more than 35 percent from its original equity investment.

The properties total 155 units and are located in various neighborhoods, including Pacific Heights, Cow Hollow and lower Nob Hill in San Francisco, as well as one in downtown Burlingame just south of San Francisco. Prado’s acquisition comes at a time when San Francisco occupancies have tightened considerably and rental demand is strong, with little to no new competing product opening in the near term, says William Faidi, CEO of Tribeca.

“Apartments are receiving two positive surges in demand: tenant and investor,” observes Stephen J. Duffy, managing director of Irvine, Calif.-based Moss Adams Capital L.L.C., which wasn’t involved in the sale, but which does track the apartment market closely. “Gen Y is renting everywhere and particularly in the strong technology and financial job centers.”

As for investor demand, Duffy says, pension funds need investment income now to satisfy existing and baby boomer retirees. “Institutional real estate allocations are favoring safer yield, for current reliability,” he notes. “Combine these impressive demand factors with the lack of apartment construction over the last years, and you’re off to the races.

“The multifamily sector’s leading role at this juncture is significant news,” Duffy continues. “It will accelerate the clearing of the foreclosure mess through affordability as apartment rents rise. Furthermore, the bull market in multifamily will set the stage for the eventual recovery and expansion of single-family housing.”