Veritas Investments, one of the most active managers of small-unit-count multifamily properties on the West Coast, has been in the headlines recently for reportedly selling about $800 million in debt backed by more than 2,100 of its San Francisco apartments to Ballast Investments. Despite this, a company representative assured The Real Deal that Veritas is "still growing" and remains a leading firm with over 6,000 apartments under management in both the Bay Area and Los Angeles.
Challenges the company faced is said to be rooted back to the impact pandemic and remote work had on housing demand. Veritas began defaulting on mortgages early this year, as the company's apartments experienced weakened demand according to the San Francisco Chronicle. Veritas' spokesperson, however, sees potential upturn and remains committed to their properties and residents in San Francisco.
In an auction sale that took place earlier this year, Veritas put up nearly $1 billion in loans on 95 properties, with bids due in June. The company intended to buy its own debt on 75 apartment buildings after going into foreclosure in January; however, it seems that they lost out to Ballast Investments. Interestingly, many of Ballast's executives previously worked at the private equity giant Carlyle Group, a company that often partners with Ballast for property purchases.
While Ballast reportedly won the $800 million portfolio for 75 buildings, there has been no news on a second, smaller Veritas portfolio of 20 San Francisco apartment buildings, also in default, with just under $140 million in debt The Real Deal reports.
Yet it is important to note that this is not the first time Veritas experienced economic distress. As the San Francisco Chronicle reveals, the company's rise was marked by its 2011 expansion following the purchase of about 2,000 apartments from the Lembi family’s CitiApartments, which were overwhelmed by debt after the Great Recession.
While Veritas is in a challenging position, the company has had notable purchases in the past. Late last year, they bought several trophy properties in San Francisco, such as the biggest apartment purchase of 2022. Furthermore, Veritas is said to have been hired by other property owners to manage their apartments using the company's RentSFNow technology.
