San Francisco’s Lembi family, has seen its holdings shrink by half to about 150 buildings since 2009. The family, which has been in the real estate business since the late 1940s, recently was notified that a foreclosure action has been planned against 19 of its apartment buildings,
the
Wall Street Journal
reported.
In a positive development for the family, multifamily properties have increased in value, and some investors have expressed interest in buying the Lembis’ buildings, the article said.
But even the market’s renewed strength mightn’t be enough to ease the Lemnis’ headaches. Their problems are particularly acute because of the large amount of recourse debt they took on when they were acquiring buildings during the boom years. That gives unhappy lenders the option of going after their personal wealth.
Patriarch Frank Lembi, 92, and his son Walter, who died last year, “have been controversial landlords,” the
Journal
article said. Tenant advocacy groups have criticized them, and the San Francisco attorney general filed suit against Lembi group companies in 2006, accusing them of violating building and safety codes and intimidating tenants into leaving rent-controlled units. The Lembis denied the allegations and are negotiating a settlement, the report noted.
“The family has tried and failed on several occasions to work out deals with lenders,” including a failed attempt to refinance the 19 buildings now facing foreclosure, the
Journal
article said. The Lembis “could lose the properties and still be on the hook for personal guarantees,” the article said. (Source:
Wall Street Journal,
Feb. 2, 2011.)
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