SAN JOSE — A San Jose hotel located near local tech hubs has toppled into a loan default, marking the second hotel property in the South Bay city to face foreclosure due to delinquency on its financing.
The fresh bout of mortgage defaults suggests that the economic aftereffects of the coronavirus outbreak may still afflict segments of the battered lodging industry in the Bay Area.
The 56-room Comfort Suites San Jose Airport hotel at 1510 N. First St. faces foreclosure after the property’s financier posted a notice of default on Oct. 31 with the Santa Clara County Recorder’s Office.
The loan that’s in default totals $5.4 million, the county records show.
Pacific Enterprise Bank provided the financing, according to loan documents that were posted with the county in March 2021.
The Comfort Suites hotel is part of the Choice Hotels chain, according to the website for the hotel.
The group that owns the hotel property, through multiple affiliates, is headed up by Hansaben Patel and Bhavesh Patel, whose primary business is in the lodging and real estate industries, according to county and state business records.
The current owners bought the hotel in 2013, paying $6.6 million for the property, which is perched along the light rail line.
The loan default for the Comfort Suites marks the second time within a few days that a San Jose hotel property has tumbled into delinquency on its mortgage.
On Oct. 26, a notice of a loan default was filed against a real estate firm that owns land in north San Jose’s Alviso district where a 200-room hotel has been proposed.
The Alviso land that’s in delinquency totals 3.2 acres and is the development site for the proposed hotel, according to county and city public records.
Mirae San Jose, a South Korea-based business group, bought the 3.2 acres of land for the hotel site in 2019, paying $22.5 million for the Alviso land, county public files show.
Even though San Jose city officials approved the hotel in 2019, Mirae San Jose never began construction on the development.
The Alviso hotel project is now in limbo as a result of the uncertainty arising from the mortgage default. Pine Tree Specialized Private Investment Trust and KEB Hana Bank provided a loan of $26.4 million to Mirae San Jose at the time of the land purchase.
In the cases of both loan defaults, the respective lenders are seeking full repayment of the original loans, along with late fees and interest.
Without this repayment, the lenders intend to conduct separate foreclosure proceedings to seize ownership of the properties or to auction off the real estate sites to a bidder.
The outbreak of the coronavirus in 2020 brutalized the hotel and travel industries in the Bay Area and worldwide, an economic affliction that worsened after state and local government agencies imposed wide-ranging business shutdowns to combat the spread of the deadly bug.
More than two years after these shutdowns were imposed, experts say that many Bay Area hotels still suffer from subpar occupancy levels and room rates.
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