Sam Hirbod-Led Group Loses San Jose Hotel to Foreclosure

An owners group led by Sam Hirbod has surrendered the Signia by Hilton San Jose hotel to its lender after failing to pay a $134 million mortgage loan.

In a foreclosure proceeding, an affiliate of New York-based BrightSpire Capital took ownership of the 541-room hotel at 170 South Market Street, downtown, the San Jose Mercury News reported.

Late last week, Superior Court Judge Shella Deen ruled against the Hirbod-led group and declined to stop the foreclosure, a decision that halted a yearslong effort by the hotel ownership group to keep the property.

The foreclosure placed an $80 million value on one of the largest hotels in the city, 41 percent less than the $134 million loan.

Last spring, a judge gave the owners group until May 1 to refinance the delinquent loan then valued at $185 million. The reason for the discrepancy was not clear.

“I lost 30 years of my life equity in there,” Hirbod told the Mercury News. “All $180 million that we put into the hotel that I had earned over 30 years of hard work is gone.”

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 “expecting to close refinancing in mid-April.”

In October, the appraised value of the Signia by Hilton was $240 million, according to a previous court filing. An appraisal by HVS Consulting & Valuation a month later pegged its value at $217.4 million, according to the Mercury News.

— Dana Bartholomew