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newcomer to San Francisco's apartment scene, Cypress Capital Investments, has purchased an apartment building at the heart of Hayes Valley for $9.7 million. The company was founded by Garrett Brasseaux, a Louisiana native who previously lived in Southern California before moving to the Bay Area in 2020. Brasseaux had always wanted to start his own company but was waiting for the right time, which he found when interest rates rose quickly in 2022. He identified San Francisco as an attractive market for investment due to its unique characteristics and potential for growth.
The 15,700-square-foot building at 501 Hayes Street is located at the epicenter of Hayes Valley, a popular neighborhood known for its vibrant commercial corridor and residential appeal. The property houses 16 residential units and two ground-floor commercial units occupied by Hazie's contemporary California restaurant and Miette Patisserie, a French bakery. The price paid for the property is significantly higher than the city's average in the second quarter, but the commercial tenants contribute significantly to the revenue, providing a strong cash flow profile and positive leverage, which are rare in San Francisco.
The property was listed for sale in March at $11 million but was eventually purchased by Cypress Capital Investments for $9.7 million after falling out of contract multiple times at higher prices. The sale was facilitated by Dustin Dolby of Colliers, who represented the long-time owners, the Bogart and Gall families, who had owned the property since 1991.
This acquisition marks Cypress Capital Investments' third purchase in San Francisco's apartment market within a year. Brasseaux's company also purchased 635 Ashbury Street for $3.26 million in February, another iconic location known for being the former home of Janis Joplin. The eight-unit building is a regular stop for Haight-Ashbury tourists, but Brasseaux clarified that Joplin's former residence did not influence his investment decision.
Cypress Capital Investments secured financing for the acquisition through loans from German American Capital for $6.5 million for 501 Hayes Street, Bancorp Bank for $4 million for 1221 Greenwich Street, and JP Morgan for $1.9 million for 635 Ashbury Street. Brasseaux acknowledged that obtaining financing is challenging in today's lending environment but credited Jonah Aelyon, director of capital partners at JLL, for being a great partner in securing favorable debt terms.
Brasseaux expressed his optimism about San Francisco's future, despite its current economic challenges. He believes that the city's AI momentum is real and that it will come back stronger after going through a boom-bust cycle. However, he acknowledged that interest rates have impacted multifamily markets across the country, making San Francisco an excellent opportunity for investment due to its unique characteristics and potential for growth.
Despite the current market conditions, Brasseaux remains selective in his search for buildings with good bones in good locations to hold for the long term. He believes that San Francisco is an exciting time to be in the market, with an opportunity to buy buildings with charm, like 501 Hayes Street and 635 Ashbury Street.
