The owners of the Signia by Hilton San Jose hotel have a month to dig up enough cash to pay off a $185 million mortgage loan, or lose the property to foreclosure.
A Santa Clara County judge gave an owners group led by Sam Hirbod until May 1 to refinance the delinquent loan secured by the 541-room hotel at 170 South Market Street, in Downtown, the San Jose Mercury News reported. Its owners had sued to delay foreclosure.
Superior Court Judge Shella Deen ruled to extend a temporary restraining order that blocks lender BrightSpire Capital from foreclosing on the hotel’s loan. She said the delay would benefit the hotel owners, its lender, creditors and all its workers.
“The court is concerned that failure to provide plaintiffs with at least an opportunity to secure a new lender could pose considerable risk of harm to the hotel, its staff and junior creditors that stand to lose their interest in the property in the event of foreclosure,” Deen said in her order.
The judge ordered the Hirbod-led group to provide a status update on April 17.
Hirbod’s ownership group bought the former 805-room Fairmont San Jose in 2018 for $223.5 million, then sank $75 million more into upgrades. BrightSpire Capital originated a $185 million loan tied to the property.
Three years later, the hotel fell into bankruptcy and closed its doors, claiming business shutdowns and travel restrictions from the pandemic had ruined its bottom line. The hotel reopened in 2022.
In October 2023, Hirbod’s San Ramon-based Eagle Canyon Capital sold the hotel’s 13-story, 264-room south tower to Mill Valley-based Throckmorton Partners for $73.1 million, or $276,894 per room, which converted it to student housing for San Jose State University.
Eagle used the proceeds to pay down part of the BrightSpire loan. In August 2023, the hotel owner was close to refinancing $165.3 million in debt.
In October, Hirbod said he’d cut a financing deal to save the property from foreclosure. In all, he said his group poured $170 million into the hotel, according to court filings.
The hotel owner told the court he’s got lenders now poised to pick up the slack. He said Bridge Investment Group and Nexpoint have agreed to a mortgage refinancing package, with the new lenders “are expecting to close refinancing in mid-April.”
“BrightSpire will be paid 100 percent of the money it is due under the loan agreements,” Hirbod said in the court filing.
“We look forward to working with you on this transaction,” Jeehae Lee, manager of Bridge Debt Strategies Fund, said in a March 10 letter detailing Bridge’s term sheet.
The Signia by Hilton has boosted its bookings for conventions, events and guests, according to Hirbod. In October, the appraised value of the Signia by Hilton was $240 million, per a previous court filing.
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