Second default in year for San Jose R&D building

UPDATED: August 22, 11:45 a.m. PT

An investor group has defaulted on a $16.3 million loan tied to a 58,000-square-foot research and development building in the Alviso District of North San Jose.

Money360, an online marketplace for real estate loans, provided the financing for 110 Baytech Drive in 2019 to building owner Alviso Park LLC, the San Jose Mercury News reported.

The delinquent loan, plus late fees, interest and penalties now comes to more than $18 million.

The delinquent mortgage is the second time in a year that a real estate loan for the building at Alviso Tech Park has slid into default, according to the Mercury News.

Last August, a notice of default was filed against the two-story R&D building, built in 1997. County records show that within the next several days, the default was rescinded.

The reason behind the latest loan default is unclear.

The building is fully leased to Lyten, a green-energy company that makes lithium-sulfur batteries using cheaper materials than conventional batteries.

If the loan default isn’t remedied, the lender could seize the office building through a foreclosure.

The default follows other mortgage delinquencies across the Bay Area, as interest rates rise, property values fall and credit stiffens.

Last month, Atlas Capital Investments defaulted on an $18.4 million loan tied to a 78,200-square-foot office and research building in South San Jose.

At the same time, an office building in San Jose tied to former WeWork CEO Adam Neumann is defaulted on a $31 million loan. The lender for a blighted office building in West San Jose seized the property after its second foreclosure after a failed attempt by Kochland to turn it into homes.

As of last month, Greater San Francisco nearly topped a national list for red flags in the struggling commercial real estate market, with the San Jose metropolitan area carrying daunting risk.

Landlords in Greater San Jose have 136 commercial-mortgage backed securities loans coming due this year, nearly half of which face challenges refinancing the debt, according to a Silicon Valley Business Journal analysis. The loans carry a combined balance of $3.4 billion.

An investor group has defaulted on a $16.3 million loan tied to a 58,000-square-foot research and development building

— Dana Bartholomew

Read more

San Francisco

Atlas Capital defaults on $18M loan tied to San Jose office building

San Francisco

Adam Neumann defaults on San Jose office building loan

San Francisco

Greater San Jose faces $3.4B in pending CMBS maturities