East Bay Hotel in Foreclosure as Local Market Struggles

Yet another Bay Area hotel has fallen into a court-ordered receivership in the latest sign of the region’s lodging market woes.

The Hyatt House Pleasant Hill was bought by an affiliate of London-based real estate and finance firm Mount Street U.S., The Mercury News reported. It acquired the property from Hawaii-based Shidler Group through a deed in lieu of foreclosure for an undisclosed amount.

The 142-room Pleasant Hill hotel at 2611 Contra Costa Boulevard is linked to a $204 million loan from 2017 that financed 22 hotels from coast to coast, according to The Mercury News. Shidler Group purchased the lineup of 22 hotels that year.

Chartwell Hospitality, which managed some of the hotels in Shidler’s portfolio, noted in court filings that it did not have the finances to keep operating.

“We are back to where we were two weeks ago, which is out of funds to keep these hotels open,” a Chartwell Hospitality executive said, per The Mercury News. “There is an incredible amount of stress that is being put on the teams at these hotels while they work incredibly hard to keep the assets open for business,” the company added in court documents.

The Bay Area — and the East Bay in particular — has seen better days when it comes to lodging.

A Mount Street U.S. affiliate similarly seized control of the 128-room Hyatt Hotel Pleasanton in May. That deal was part of the court-ordered receivership for the nationwide portfolio.

Earlier this month, the 500-room Oakland Marriott City Center in downtown Oakland, the largest hotel in the city, was seized through a foreclosure proceeding. The value for that building was placed at $70.2 million, marking a more than 50 percent loss in value from when Gaw Capital Partners bought it in 2017 for $143 million.

Elsewhere in Oakland, the 145-room Waterfront Hotel in Oakland’s Jack London Square closed suddenly in January. Around the same time, lenders for the 289-room Radisson Hotel Oakland Airport sued to foreclose on the property. Last August, the 360-room Hilton Oakland Airport Hotel also closed its doors. A month prior, Hawkings Way Capital defaulted on a $112 million loan on the AC Hotel and Residence Inn by Marriott in downtown Oakland after a year of operation; that property went into foreclosure in April.

In May, the 541-room Signia by Hilton in downtown San Jose, the largest in the city, was seized through a foreclosure. That transaction valued the lodging at $80 million — a significant drop from the foreclosed loan’s $134 million total.

In Berkeley, the University Inn & Suites similarly headed to foreclosure in May after its owner defaulted on a $10.5 million loan. There are other hotels to have faced loan defaults including a Motel 6 and Super 8 in San Jose and a Super 8 in Livermore. A Hyatt Place hotel in Newark owned is in default on an $18 million loan from 2019.

— Chris Malone Méndez