In his early years, Bay Area native Yat-Pang Au said he never dreamed he’d become a major player in San Francisco’s commercial real estate world.
Back in the 1990s, with degrees in electrical engineering, computer science and information networking, Au ran the family business, an alarm and security firm. On the side, he dabbled in real estate. In 1996, Au moved into one the seven condos he owned at the time.
That’s when he realized alarm systems weren’t his passion—the real estate industry was. With the city’s real housing market flourishing, Au jumped into the real estate business full-time, founding Veritas Investments partially backed with funding from his family and friends.
Fundamentally, this is an asset class that is not about making quick money
“I set up Veritas Investments in 2007 really as a way to have friends and family partner up with me to acquire buildings in the city of San Francisco, one building at a time,” he told The Registry during an interview in late April. Even though the market soured abruptly in 2008, sinking real estate prices enabled San Francisco-based company’s early growth. “It was in that time of disruption that really allowed Veritas to grow. We were able to have the opportunity to acquire and invest in assets that we otherwise would not have had,” Au said.
Going through that period also taught the entrepreneur that keeping an eye to the future was a must. “Fundamentally, this is an asset class that is not about making quick money. It’s really one about investing for the long haul,” he said.
According to Au’s estimates, today his privately-held company with a $2.5 billion real estate portfolio controls about 2 percent of San Francisco’s multi-family stock, making him one of the city’s largest residential landlords.
Today, his company controls approximately 200 buildings, each containing 20 to 30 apartments. Renters come from all walks of life, he said, with about 15 percent comprised of young tech employees.
The business has thrived by buying and sprucing up older, smaller apartment buildings that alone can lack financial sizzle and be overlooked by large investment firms that want flashier holdings and financial returns. A vertically-integrated firm, Veritas also runs its own property management, design and construction management operations.
Under common ownership, Veritas is able to standardize operations and add leading-edge amenities. The company has distinguished its apartments by putting in shared vehicle service Zipcar and Google Fiber, the super-fast internet and television service. Last fall, through a partnership with Airbnb, Veritas began allowing tenants in some of its buildings to rent their units out short-term. Having electric scooters on site and keyless entry to apartments are also planned.
While Veritas got its start sprucing up diamonds in the rough in San Francisco, the company has recently branched out to the East Bay. Veritas completed its first acquisition outside San Francisco with the December purchase of two apartment buildings in Oakland, one with 37-units and the other with 24 units and both near Piedmont Ave. An 18-unit apartment building in central Alameda is in contract, a company spokesman said.
Smaller, older, mom-and-pop buildings are their sweet spot and current acquisition focus. “The broader East Bay is what we are looking at—Berkeley, Oakland, Alameda, Walnut Creek,” he said.
Burgeoning demand to live in the East Bay, with its easier commute into San Francisco than some other communities, is driving Au’s interest in the area. “The choice of moving to the East Bay is not because there’s less competition there. I would say competition there is equally as fierce,” as property values across the Bay Area rise, he said. “It’s just that we have very long-term capital that allows us to invest in the long haul. The values will go up, if you have a long enough time to create that value.”
The company is also in the process of a rebranding to bring operations of its RentSFNow apartment leasing subsidiary and Greentree Property Management company under the Veritas name as of late May. The upcoming brand change also include the roll-out of a new logo and a new website, www.veritasnow.com.
Au doesn’t believe the growing firm, which employs 200 people including contractors, will be building new apartments from scratch anytime soon. Rising real estate prices and a “difficult entitlement process” are contributing factors, Au said.
About 99 percent of Veritas’ units are rent controlled while others are priced for the open market, “with price ranges that go from $500 to $5,000,” Au said. That investment model provides “a cushion of outside opportunity as turnover occurs, as well as downside protection when market rents decline,” he said.