Mosser Capital and the Swig Company have fallen behind on payments for a $68 million loan tied to five apartment buildings in San Francisco, The Real Deal has learned.
The firms are 30 days delinquent on debt provided by MF1 Capital and then packaged into a collateralized loan obligation, or CLO, according to data from Trepp, which cited servicer commentary.
The debt is tied to 825 Post Street, 750 O’Farrell Street, 1008 Larkin Street, 839 Leavenworth Street and 72 Gough Street. Together, the properties, which were built between 1907 and 1913, total 294 units. Mosser and Swig spent $104 million to buy the five buildings in 2015, according to property records filed with San Francisco County.
Mosser and Swig have struggled to meet debt payments on the properties for the last year, due to rising interest rates and dropping revenues across the portfolio.
Mosser did not respond to a request for comment. Swig could not be reached for a request to comment.
As of September, the debt service coverage ratio on the debt was 0.23. Anything less than 1 denotes the properties are not making enough income to service the debt.
MF1 loaned the money with a floating rate in 2021, when interest rates were near zero. At the time of origination, Mosser and Swig were paying about 3 percent in interest.
The firms have now hit their rate cap of 5.9 percent, according to Trepp. The loan is set to mature next January.
Last year, Trepp called out the loan for its higher risk of default, given four of the properties are located in Lower Nob Hill and the Tenderloin, two areas with higher crime rates than the rest of the city.
The debt “stands out as a loan to watch because it is in [or] close to a high-crime area,” Trepp Research Director Stephen Buschbom said at the time. “The financial performance has underperformed what was underwritten rather significantly.”
Mosser and Swig are not the only firms that have struggled to meet debt payments on apartment complexes over the last year.
Prominent San Francisco-based landlord Veritas defaulted on around $900 million in debt last year, prompting Brookfield to buy the loans and then foreclose on 76 buildings.