132-room, four-story hotel at 1510 South De Anza Boulevard in San Jose, concept.
SAN JOSE — A San Jose site where a hotel with more than 100 rooms is proposed has tumbled into a loan default and faces foreclosure, a fresh indicator of post-coronavirus economic maladies for the Bay Area lodging sector.
The hotel, which has yet to be built, would consist of 132 rooms at 1510 South De Anza Boulevard in west San Jose, very close to the Cupertino border, according to San Jose planning documents.
North Star Hotel Development, which also operates as North Star Development, has proposed the development of the lodging complex.
The four-story hotel would also have featured a ground-floor restaurant and a rooftop deck, the city documents show.
A commercial building at present occupies the 0.9-acre property, which is at the corner of South De Anza and Sharon Drive, Google Maps shows.
The loan that’s in default totals slightly less than $4.6 million, according to documents filed on May 24 with the Santa Clara County Recorder’s Office.
The now-delinquent mortgage was issued in 2021, the county real estate records show. The joint lenders were LBC Capital Income Fund and Fogel Family Trust, according to the loan default notice.
The Northstar Hotel Development affiliate bought the property in 2019, paying $6.5 million for the site, according to a database of real estate transactions.
This loan default represents one of the most recent known examples that suggest financial difficulties have begun to haunt sites where hotels have been proposed but have yet to be developed.
On May 4, South Korea-based Pine Tree Investment & Management seized ownership of an undeveloped 3.2-acre site at 7 Topgolf Drive in San Jose’s Alviso district where a 200-room hotel had been proposed. Pine Tree was the lender for the land site. The hotel was never built.
In December 2022, a hotel development site at 2850 Stevens Creek Boulevard in San Jose flopped into default on a $6.7 million loan that had been provided in 2019 from First Credit Bank. Adeel Mahmood, a business executive, heads up an affiliate that had proposed the development of an 11-story, 175-room boutique hotel on the site. This hotel also has yet to be built.
The financial woes affecting the Bay Area hotel market are hardly limited to San Jose.
In March, the historic Huntington Hotel, nestled atop San Francisco’s famed Nob Hill, was seized through a foreclosure whereby the new owners bought the hotel for $29.3 million — a fraction of the hotel’s assessed value of $87.6 million.
A block away, the Stanford Court Hotel is burdened with what is being described as a “non-performing senior loan with a total outstanding balance of $108.2 million,” according to a marketing brochure that was being circulated this year by Eastdil Secured, a commercial real estate firm.
As for the San Jose hotel on South De Anza Boulevard, multiple efforts have been undertaken to attempt to sell the development site.
In one instance, the hotel site was being offered for sale for slightly less than $7.6 million.
Despite multiple marketing efforts, the hotel project site has yet to find a buyer.
One marketing package stated that the site could also be suitable for housing development — although that would require a brand-new entitlement process with the San Jose Planning Department.