SAN JOSE — An overseas investment group has struck a deal that could help it gain ownership of a San Jose hotel development site whose real estate loan has tumbled into delinquency and default.
A South Korea-based group has acquired a $26.4 million loan that had been provided to the real estate firm that previously proposed a hotel at 7 Topgolf Drive in San Jose’s Alviso district, according to documents on file with the Santa Clara County Recorder’s Office.
That loan is now in default and Pine Tree Specialized Private Investment Trust and KEB Hana Bank in recent months began the process to foreclose on the loan and seize the property.
The lenders even scheduled a trustee’s sale to publicly auction off the property or seize the hotel project land, which totals 3.2 acres, through a foreclosure on the loan.
Before the foreclosure proceeding could be completed, however, Pine Tree Specialized and KEB Hana Bank found an investment group willing to assume control of the loan.
Sol San Jose Owner, a real estate entity based in Seoul, South Korea, was assigned ownership of the mortgage, county records show.
By undertaking this process, the Sol San Jose organization is in a position to foreclose the loan on its own and become the new owner of the hotel development site.
The new owners of the Huntington Hotel in San Francisco pursued a procedure of this sort.
In the case of the Huntington Hotel, those new owners reached a deal with lender Deutsche Bank to first obtain ownership of the delinquent loan for the property. Next, the new loan holders foreclosed on the delinquent mortgage and officially bought the historic hotel tower on Nob Hill.
As for the north San Jose hotel development site, the loan assumption documents revealed only sparse information about the new ownership group beyond its location in South Korea.
The proposed hotel development — approved by the city but never built — is located next to the Topgolf entertainment, dining and golfing complex in San Jose.
A South Korea-based company, operating as Mirae-San Jose, bought the land for the hotel site in 2019, paying $22.5 million for the property, according to the county real estate records.
In 2019, San Jose city officials approved a 200-room hotel project at 7 Topgolf Drive, planning documents show.
The coronavirus outbreak impacted the global economy in 2020, the year after the Mirae-San Jose group bought the hotel land and obtained the financing package that’s now in default.
The economic fallout from the pandemic has jolted the travel and hotel markets worldwide, including in the Bay Area. Hotel occupancy levels have withered in the wake of the coronavirus.
Coronavirus-linked economic uncertainties still loom over numerous hotel properties, especially sites where hotels might be constructed.
The highest-profile new development in the area is the bustling and popular Topgolf San Jose complex, which opened in 2021.
Topgolf has been a steady draw as an entertainment, sports, and dining center. Topgolf operates high-tech driving ranges that allow people to hit golf balls equipped with microchips that record distance and accuracy. The venues typically also include dining and drinking establishments.
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