Oyster Buys a Pearl
Submitted July 18, 2010, 10:13 PM
Dean Givas, former head of condominium developer Intracorp San Francisco, has acquired a fully entitled housing site for 62 new condos in the city in the first foray of his new Oyster Development Corp.
Oyster and its money partner, Canada’s Tricon Capital Group, paid $4.25 million for the 25,817-square-foot site at 1800 Van Ness Ave. and 1754 Clay Street. The eight-story project includes 5,100 square feet of retail and 73 parking spaces.
The partners have assumed a land hold for up to three years, but he expects appreciation in San Francisco housing values to justify construction as soon 12 months, Givas said. The project’s ultimate cost is an estimated $48 million.
The purchase is the first of up to five infill, high-density housing sites that Givas hopes to acquire in the next year in the San Francisco Bay Area with Tricon’s backing. There is no stated limit to the number that can be purchased, however, and both he and Tricon prefer more rather than less, Givas said. His selections will be “very location sensitive.”
The goal is to create a pipeline of ready-to-develop condominium sites that can be initiated as the region’s housing market recovers.
While at Intracorp, Givas oversaw development of the 269-unit Arterra condominiums and town homes in Mission Bay and The Hayes, a 128-unit condo tower in the city’s Civic Center neighborhood. Both have sold out. The current project is in the city’s Pacific Heights-Nob Hill neighborhood.
Toronto-based Tricon has $330 million in Tricon IX LP, the fund that participated in the deal. The fund is dedicated to buying distressed housing in the United States, particularly finished or partially finished lots or development sites. The company also is raising additional funds. In May, Tricon raised gross proceeds of $63 million in an initial public offering. The money will be used to create larger limited partnerships sought by its institutional investors and to increase Tricon’s assets under management, Tricon Chairman and Chief Executive Officer David Berman said at the time. Tricon finances residential development across the United States and Canada.
Oyster paid $53 per square foot of sellable residential property. The proposed tower is expected to have about 83,000 sellable square feet. Givas estimates the land price at half the going rate in 2007. He believes the deal marks 2010’s first San Francisco sale of entitled high-density, high-rise multifamily land, though he knows of two other properties that are under contract to other buyers.
Givas cited the paucity of new condo projects slated for delivery in San Francisco this year and going forward as a compelling reason for investing now. He is not alone in his assessment. Alan Mark of San Francisco’s The Mark Company has noted the same dearth. The Mark Company tracks condo development and prices as well as condo resales in multiple Bay Area and California markets.
According to its most current report, San Francisco had 137 condos under construction and 877 selling at the end of May. That compares to 248 condos under construction at the end of last year and 1,023 new units selling.
