San Jose hotel project site escapes foreclosure with real estate deal

SAN JOSE — A San Jose hotel development site has been rescued from foreclosure — at least for now — with a purchase of the real estate where the lodging complex would have been built.

A 175-room, 11-story hotel tower had been proposed for the site, which is near San Jose’s mega malls. At present, a gasoline station is located on the property.

A San Leandro-based affiliate headed up by a gasoline station executive paid $4 million for the property, according to documents filed on July 13 with the Santa Clara County Recorder’s Office. The just-bought site is at 2850 Stevens Creek Boulevard.

For years, a gasoline service station had operated on the site. TintWorks, a window tinting service, is now located at the site.

The property is located at the corner of Stevens Creek Boulevard and South Clover Avenue and is across the street from Westfield Valley Fair Mall.

It seems unlikely that a hotel will be constructed on that site any time soon, however.

For one thing, the buyer is an affiliate that’s linked to San Leandro-based Salkhi Petroleum, whose president is business executive Arash Salkhi.

Salkhi’s LinkedIn page states that his company operates gasoline stations in Northern and Central California.

Plus, the lousy economy for the lodging industry means new hotel development projects are very much out of favor with developers and lenders.

San Jose city officials had approved the hotel project for development prior to the outbreak of the coronavirus. That cataclysm prompted state and local officials to impose wide-ranging business shutdowns to combat the spread of the deadly bug.

As the coronavirus raged on, hotels worldwide emptied out and suffered sky-high vacancies. Even after the lockdowns had ended, hotels in business-oriented markets continued to suffer brutally low occupancy levels.

The infrastructure of the old gasoline station appears to be largely intact, which means a renewed fueling operation could be feasible.

The hotel development site had teetered on the edge of foreclosure on multiple occasions. Considerable time went by and the hotel was never built.

In 2019, First Credit Bank provided $6.7 million in financing to an affiliate headed up by Adeel Mahmood, principal executive with Villa Developers & Investment. The Mahmood group defaulted on the First Credit Bank loan at least twice.

Mahmood, who had proposed the hotel project, wound up selling the gasoline station site to the Salkhi Petroleum group.

First Credit Bank is still involved with the financing for the property, despite the new ownership of the site. The bank provided $4.5 million in financing to the Salkhi group’s affiliate.