Commercial real estate financing in San Francisco

Why does one government decide so much of a San Francisco deal?

San Francisco is the only consolidated city-county in California — the city and the county are the same government, created when the state split the original county in two. The desk that zones a parcel is the desk that issues the building permit, assesses the property, records the deed and collects the documentary transfer tax. There is no separate county recorder to coordinate with and no unincorporated fringe inside the city line, which removes a whole class of coordination risk and concentrates every remaining question in one place.

The transfer tax is the part that surprises out-of-town sponsors. It is steeply graduated by consideration, the top brackets run an order of magnitude above the entry rate, and the exemptions written into the city’s business and tax regulations code are granted only where the recording party claims and documents them at recording. On an institutional-size trade that is a closing-cost line to be modelled and allocated between buyer and seller, not a rounding item — and because the assessor, the recorder and the planning department are the same government, the number cannot be negotiated somewhere else.

That single-desk quality cuts the other way on building condition. Under the city’s mandatory soft-story retrofit program, wood-frame residential buildings of two or more storeys standing over a soft or weak ground floor — the garage-and-storefront level that gives the class its name — and permitted before the program’s cutoff had to be screened, permitted and retrofitted on a tiered schedule administered by the Department of Building Inspection. A building that has not finished carries code enforcement exposure and an earthquake warning placard, and a buyer inherits both. Lenders treat an outstanding retrofit obligation the way they treat any funded capital item: it goes into the budget, it is often escrowed, and it moves proceeds on a bridge or acquisition file.

What do Proposition M and the reuse program change about a downtown site?

Proposition M meters the amount of new office space the city may authorise in a given year, so an office entitlement in San Francisco is a place in a queue rather than a zoning conclusion. Construction debt on an office scheme is therefore underwritten against an allocation, and a sponsor who has not secured one is holding a site, not a project. Running in the opposite direction, the commercial-to-residential adaptive reuse program lets a qualifying downtown building convert to housing with Planning Code requirements waived, inclusionary and impact fee relief attached, and — under the measure city voters approved for first transfers of converted property — the city transfer tax waived on the first sale after conversion.

For a lender that combination is a different underwriting problem from either a ground-up file or a stabilised acquisition. A conversion is priced on the waivers as much as on the construction budget: the fee relief and the transfer-tax waiver are real value that attaches to a specific approval on a specific building, and they are lost if the approval is not obtained in the window the measure set. Mission Bay, built on landfill and now institutional and residential, and the Dogpatch industrial-to-residential edge are where that arithmetic gets run most often.

How does YieldStack actually place a loan?

You describe the deal once, in a 5-minute submit, and that single file is screened against 20,000+ loan programs. Most deals return 5–8 matches, with a median first offer in under an hour. There is $0 upfront; the fee is 0.50–1.00% and is paid only at closing.

YieldStack is a commercial mortgage brokerage, not a lender. We do not hold the capital and we do not decide your rate — we run the process that gets competing lenders to quote the same deal on the same terms, then help you read the offers side by side.