Remnants of the Lembi Empire List Three SF Apartment Buildings

A photo illustration of Frank Lembi and 77 9th Street (left), 500 Larkin Street (middle right) and 935 Geary Street (top right) (Getty Images, Redfin, Legacy)

Businesses tied to San Francisco’s legendary Lembi family put three downtown apartment buildings on the market this week.

All of the buildings are long-term properties that LLCs tied to the former rental housing juggernaut known as CitiApartments have owned, in some cases, for more than two decades, according to public records. The family managed to keep the assets thanks to their high-profile defaults after the 2008 financial crisis.

They were listed by Charles Post of Post Real Estate Advisors, who also listed three other Lembi-related properties over the summer. He did not immediately return a request for comment.

The six properties were named in an injunction against CitiApartments and its various subsidiaries, settled in 2011, by then-City Attorney Dennis Herrera for “an impressive array of unlawful business and tenant harassment practices,” according to a press release from his office at the time.

In the injunction, Herrera accused Frank Lembi, his son Walter Lembi and his nephew David Raynal and the family’s “Byzantine array of business entities, trusts and partnerships” of purchasing apartment buildings in San Francisco harassed and bullied long-term rent-controlled tenants into leaving their units and then renovating them, often without permits, to attract new tenants at market prices.

“The illegal business model appears to have allowed CitiApartments, Skyline Realty and other entities under the sway of real estate family patriarch Frank Lembi to aggressively outbid competitors for residential properties throughout San Francisco for several years. — before lawsuits and a severe economic downturn forced the would-be empire into bankruptcies, foreclosures and receiverships,” according to the statement announcing the settlement, which included up to $10 million in fines.

At the time of settlement, CitiApartments had lost approximately two-thirds of its more than 300 properties, with the vast majority of its remaining holdings in receivership. The fee structure put in place by the city attorney’s office depended on the number of buildings the Lembis could maintain. Damages would be limited to $1 million, plus interest, if the Lembis agreed to “permanently cease property management” in San Francisco, an “unprecedented stipulated provision,” the statement said.

The Lembis evidently decided not to accept the city’s offer to leave town, and a 2013 debt restructuring allowed its subsidiaries to retain at least six properties, according to a city filing at the time. With all three downtown buildings listed this week, all six are now on the market.

Three of the smaller buildings were built in July — an 18-unit Marina property, a two-unit unit with seven parking spaces in the Castro, and a single-story commercial building occupied by a nonprofit organization in Japantown. The 7,500 square foot retail space has been listed at $4 million and is the only one in the top three listed as “under contract” on listing sites. The other two saw substantial price drops on September 5, the same day the biggest announcements hit the market.

The largest and most expensive of the new listings is 935 Geary Boulevard, a 10-story tenderloin apartment building known as The President, which is asking for just under $16 million, or about $135,000 per unity. It has 113 efficiency units with private bathrooms, four bachelor apartments, one “townhouse-style” bedroom and two office spaces in about 45,000 square feet, according to listing notes. It’s 30% vacant, with some units in the 1923 property “will require renovations before renting” and an average rent of $500 a month.

At SoMa, the six-story, 1912 building at 77 9th Street is 95% full, according to its listing notes. It has 43 studios, each with its own private bathroom and kitchen, which rent for an average of $1,500 per month; a one-room apartment in the SRO style with a bathroom in the hall and without a kitchen; and 10 one-bedroom apartments that rent for an average of $1,800 per month. The 23,000 square foot building is listed for just under $10 million, or $185,000 per unit.

Another Tenderloin building, this one at 500-510 Larkin Street, commands about the same unit price for almost double the square footage, although much of that extra space is used by a bar of three floors and event space with a dedicated outdoor patio. The corner building is six stories tall and has 43 studios, nine one-bedroom apartments, a two-bedroom apartment that “needs upgrading” and a retail storefront currently leased to an organic grocer. Of the three buildings, this is the most recent purchase, purchased for $6.5 million in 2004.

Many longtime landlords have started selling their apartment buildings in the city as rents rebound from pandemic lows, with some northern neighborhoods approaching their pre-pandemic rates. The $18 million sale of a longtime trophy building overlooking Alamo Square is the biggest multi-family sale of 2022 so far.


Comments are closed.