132-room, four-story San Jose hotel at 1510 South De Anza Boulevard, concept. (Lowney Architecture)
SAN JOSE — A lender has scheduled a property auction and foreclosure proceeding for a San Jose site where a hotel of more than 100 rooms was proposed but never built.
North Star Hotel Development, which also operates as North Star Development, had proposed the hotel project on land it bought in 2019, according to Santa Clara County property records.
The developer and property owner had pitched a 132-room, four-story at the development site, which is at 1510 South De Anza Boulevard in San Jose, city planning and county real estate documents show.
The 0.9-acre development site is at the corner of South De Anza Boulevard and Sharon Drive.
Acting through an affiliate, Northstar Hotel Development paid $6.5 million for the San Jose site in the 2019 transaction, according to a real estate database.
In May, the property tumbled into a default on its loan, which totals slightly less than $4.6 million, according to documents that were filed in 2021.
LBC Capital Income Fund and an entity operating as Fogel Family Trust provided the now-delinquent mortgage, county records show.
The lending consortium is pushing to put the property up for public auction as soon as Sept. 20.
This loan default represents one of the most recent known examples that suggest financial difficulties now haunt properties where hotels were proposed but have yet to be developed.
Plus, in multiple Bay Area locations, lenders have either seized hotels through foreclosures or have begun proceedings to find buyers for delinquent hotel loans as a way to bring in a new owner for the lodging properties.
These various scenarios all point to a Bay Area hotel sector that is still weakened by economic maladies unleashed by the coronavirus on the lodging industry worldwide and in this region.
Hotels in markets that rely primarily on business guests to fill their rooms face the biggest challenges.
In sharp contrast, hotels that are in popular resort or destination markets such as the North Bay Wine Country, Monterey Bay, or Big Sur have managed to command healthy occupancy and revenue levels.
As for the San Jose hotel on South De Anza Boulevard, multiple attempts have been made 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.
Originally published at George Avalos