Parkmerced This is the firstphase of a long-term master plan that will transformParkmerced.

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SAN FRANCISCO—Maximus Real Estate Partners was founded in 2012by Rob Rosania and Seth Mallen. Rosania acquired his interest inthe 152-acre Parkmerced in 2005.

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Thereafter, he and his local team negotiated a developmentagreement with the city and began repositioning the property tobecome a model of sustainable urban living. Rosania and his teamsecured new entitlements in 2011.

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Maximus has now recapitalized and cleared the way for financingPhase 1 of its long-term revitalization project. With a loanpackage of $1.775 billion from Barclays, Citi and ApartmentInvestment and Management Company/Aimco, Maximus has successfullyrefinanced Parkmerced. Maximus previously bought out FortressInvestment Group and refinanced Parkmerced in 2014.

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Aimco's portion was $275 million. It also acquired a 10-yearoption to acquire a 30% interest in the partnership and in sodoing, participate in its substantial development pipeline. Theoption to acquire a 30% interest in the partnership is for 10 yearsat an exercise price of $1 million, increased by 30% of futurecapital spending for development/redevelopment of the property.

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This is the first phase of a long-term master plan. Therecapitalization enables Maximus to initiate Phase 1of its plannedrevitalization of Parkmerced (approximately 2,000 new apartments),with the intention of securing construction financing in early 2020and breaking ground later next year.

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With San Francisco's booming employment market including thenation's highest year-over-year job growth along with a deepeninghousing shortage, the new development comes at a critical time.

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"We will now be able to build nearly 2,000 new homes in the nextfew years–a huge delivery of new housing at a time when SanFrancisco desperately needs it," Rosania said.

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The fully developed property will include nearly 10,000 homes,80,000 square feet of office space, 230,000 square feet of retailspace, a new elementary school and 64,000 square feet ofamenities.

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Maximus was advised by Pat Hanlon at Ackman Ziff, and Adam Spiesand Douglas Harmon of Cushman & Wakefield.

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"Of our recent major large-scale residential sales andrecapitalizations around the country, Parkmerced is special,"Harmon tells GlobeSt.com. "We have been fortunate to be the advisoron five different sales or recaps of this property over the last 20years beginning with Leona Helmsley's sale for $326 million in1999. Over the years, the valuation of this premier asset hassteadily increased and this latest transaction now values theproperty at $2.1 billion. Our 2015 record sale of Peter Cooper StuyTown for $5.44 billion and last year's $905 million sale of SpringCreek Towers/Starrett City were monumental large-scale multifamilytransactions, but Parkmerced is the deal that we have transactedmultiple times and it will continue to benefit from its location inone of the most sought-after residential markets in the country–theBay Area in Northern California."

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Parkmerced has a scenic westside location with 152 acres, 3,221existing apartment homes and the vested right to develop 5,679market-rate apartment homes. The re-envisioned Parkmerced willfeature an updated design, vastly improved mass transportation andan emphasis on sustainability, likely making it the onlycarbon-neutral neighborhood in the world.

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"The recapitalization of San Francisco's Parkmerced, the largestprivate residential property in Northern California, will helpbuild 2,000 new homes with the ability to add an additional 4,000units over time," Spies tells GlobeSt.com. "This will also allowfor ample room to grow the retail offerings, build a school andoffer modern amenities at a very important time for the SanFrancisco housing market."

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San Francisco's highly educated tech and finance-heavy workforceearns a median income of $130,000 per year, ranking number out ofthe top 50 US markets. Its multifamily rents have increased at a4.12% compound annual growth rate during the last 20 years, fifthin the nation. Its median home price is $1.1 million, first in thenation with a home price-to-income ratio of 8.5 to 1.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.