The value of one of Downtown San Francisco’s largest luxury apartment buildings has been cut nearly in half, according to commercial real estate data provider Trepp.

NEMA, the glass-covered tower at 8 10th St., has seen its value drop from $543.6 million in 2018 to $279 million. Trepp notes that this decline means the value sits well below the loan balance, making the debt more expensive than the property itself.

The Real Deal first reported the news. 

The 754-unit apartment complex on the corner of 10th and Market streets opened in 2013 as a part of the Mid-Market revival kicked off in part by the city’s tech boom and the so-called Twitter tax break. Amenities at the building across the street from Twitter headquarters include multiple public plazas, a fitness center and a 60-foot lap pool.

Then came the pandemic, which hollowed out the neighborhood of major tech tenants like Uber, Block and DoorDash. Concerns about public safety and street conditions led to the closure of the nearby Whole Foods less than a year after opening. 

NEMA’s debt-service coverage ratio, which measures the ability of a property’s cash flow to pay its debt, has been below 1 since 2020, a troubling sign for the ability of the developer to control the building.

According to Trepp data, occupancy in the beginning of 2023 was 92%, compared to 90% in 2021 and 72% in 2020. However, revenue has seen a steep decline during the pandemic, from $36.8 million in 2019 to $29.2 million in 2022.

Loan data from Trepp said the main loan on the property is delinquent and that the deal has been transferred to special servicing, which are enlisted to avoid a loan default. 

The cause for the transfer into special servicing is “imminent monetary default,” according to Trepp loan documents.

Crescent Heights did not respond to a request for comment. 

The property has a bit of a troubled development history. Crescent Heights purchased the site in 2006 and originally intended to build for-sale condos, but switched up their business plan in the wake of the Great Recession. 

The difficult economic environment meant that the project didn’t break ground until 2011. 

The current challenges in commercial real estate are squeezing many property owners between lower revenues and higher debt payments.

The underwater mortgages are leading an increasing number of property owners to stop debt payments, giving buildings back to their lenders, including Park Hotels and Resorts and a brand-new condo complex in Mission Bay.