San Jose Hotels Fall Into Loan Default

Two more Bay Area hotels have gone into default, marking the latest hospitality properties in the region to face financial hardship in the past year.

A two-hotel complex consisting of a Motel 6 and a Super 8 by Wyndham in San Jose has defaulted on a $21.7 million loan provided by Choice Hotels International, The Mercury News reported. The site, located at 2560 Fontaine Road, boasts 204 rooms across the two hotels.

An affiliate led by Texas-based lodging executive Jagmohan Dhillon acquired the south San Jose complex from a Blackstone Group affiliate in 2022 for $29.9 million. Property taxes on the site that were due last year have become delinquent. The Dhillon affiliate secured the Choice Hotels loan last August.

Across the Bay, another Dhillon-associated property, the Super 8 by Wyndham in Livermore, has fallen into default and is now headed to bankruptcy proceedings. Dhillon-led affiliate D Lassen defaulted on a $7.7 million loan from the State Bank of Texas in 2022 and filed for bankruptcy at the 102-unit property, acquired from a Blackstone affiliate, at 4673 Lassen Road last month, the Mercury News reported.

The East Bay in particular has been hard hit by the hotel market’s downturn.

A Hyatt Place hotel in Newark owned by Shivam Real Estate is in default on an $18 million loan secured in 2019, according to The Mercury News.

In Berkeley, Kubera Hotel Properties’ 113-room University Inn & Suites in Berkeley went into foreclosure last month. Kubera CEO Pradeep Kantilai T. Khatri filed for bankruptcy on the property on June 6.

Oakland has seen a growing string of foreclosures, loan defaults and property closures over the past year.

Oakland’s largest hotel, the 500-room Oakland Marriott City Center in downtown, went into default in February due to a delinquent $100 million loan. A foreclosure auction is set for June 24.

The 145-room Waterfront Hotel in Oakland’s Jack London Square closed suddenly in January. The same month, lenders for the 289-room Radisson Hotel Oakland Airport sued to foreclose on the 8400 Edes Avenue property. The 360-room Hilton Oakland Airport Hotel shuttered in August.

Last July, Hawkins Way Capital defaulted on a $112 million loan on the twin AC Hotel and Residence Inn by Marriott at 431 Jefferson Street in downtown Oakland just a year after opening. The property went into foreclosure in April.

— Chris Malone Méndez