San Jose Multifamily Properties Find Buyers

A couple of recent trades in San Jose put the South Bay city’s multifamily market in rarefied air — at least on a relative basis.

Consider that both deals involved complexes of affordable units, one marked a new high-water mark for the year on overall price in the broader Santa Clara County market, and each of them topped $300,000 per unit.

Indeed, the range from $317,000 for a property just north of the 280 Freeway and $390,000 for just south of the thoroughfare in West San Jose nearly touches the $400,000 or so per unit average of multifamily in neighboring San Francisco lately, and is well ahead of farther-flung major metros such as Chicago, where the average is closer to $200,000 per unit.

Real estate firm Standard Communities, nonprofit Housing on Merit, and investment company Vistria Real Estate bought the Park Kiely apartments in the larger of the two deals, acquiring 355 Kiely Boulevard for $370 million. The $390,300-per-unit transaction was made possible by a purchase loan of $203.5 million from JLL Real Estate Capital, which then transferred it to Freddie Mac.

The transaction is the priciest in Santa Clara County so far this year, according to the Mercury News. The previous high-water mark in the county was set in April with the sale of The Villages at Cupertino apartments to Rockpoint Group for $207.2 million.

Elsewhere in the South Bay city, San Francisco-based Sack Capital Partners and Encinitas-based Las Palmas Housing bought the Fountain Park apartments for $52 million. The property at 1028 South De Anza Boulevard consists of 164 units, working out to $317,000 per unit.

San Jose has seen other multifamily properties change hands in recent months, some dipping into the Chicago range.

Los Angeles-based real estate firm Post Glen Group and Newport Beach-based nonprofit Affordable Housing Access bought the Orchard Glen apartments in south San Jose in June. Post Glen Group Affordable Housing Access bought the 288-unit property at 3975 Seven Trees Boulevard for $61.1 million, about $212,000 per unit.

Then there are the upper-tier deals, which also seem to be coming along in San Jose.

Back in May a Hines affiliate bought the 108-unit Levare luxury apartment complex at 3003 Olin Road in the Santana Row commercial and residential district for $73.9 million, nearing $700,000 per unit.

That seems to have sparked some interest–last month, Santana Row owner Federal Realty Investment Trust started preparations to sell the 212-unit Misora complex in the development.

At long last, buyers save distressed SF hotels

A two-year saga involving two of San Francisco’s biggest hotels has come to an end.

New York-based Newbond Holdings and Conversant Capital are in contract to buy the beleaguered Parc 55 and Hilton Union Square hotels. Hilton Union Square is the city’s largest hotel with 1,921 rooms, while The Parc 55, also a Hilton property, is among the top five with 1,024 keys.

The sale price wasn’t disclosed, but a July bondholder report placed the hotels’ combined appraised value between $450 million and $500 million, down from their 2016 appraised value of nearly $1.6 billion. The buyers were required to put down two deposits of $10 million each.

The buildings fell into default in 2023 when former owner Park Hotels & Resorts defaulted on its $725 million loan on the properties. A court-appointed receiver spent the next two years looking for a buyer. Sales deadlines were repeatedly pushed as foreclosure loomed.

The Bay Area lodging market remains strained, as several hotels in the East and South Bay enclaves have fallen into foreclosure or shuttered entirely over the past two years.

Fairfield found to be illegally taxing property owners

The city of Fairfield is in hot water after a court found it to be illegally taxing property owners.

The First District Court of Appeal in San Francisco ruled the Solano County city collected assessments for lighting, landscaping and roadway maintenance in the Rolling Hills Maintenance District in violation of a 1996 voter-approved ballot measure known as Proposition 218.

That law mandated public votes on any property tax increases. The assessment jumped from $196.33 in 1997 to $300 in the 2022-2023 year. These payments aren’t categorized as property taxes, but the court ruled the city illegally treated and levied them as such.

If the ruling stands, affected property owners would be entitled to refunds of excess payments. The City of Fairfield might also be required to reduce its assessments until a special election is held.

Shorenstein counts video game companies among new neighbors

Shorenstein Investment Advisers has added another mixed-use property in the Bay Area to its portfolio.

The San Francisco-based outfit acquired the three-building Park Place at Bay Meadows mixed-use development in San Mateo for $175 million. The 258,000-square-foot campus, sold by J.P. Morgan, consists of two office buildings and a retail center.

The 1100 Park Place office building purportedly sold for $85.7 million, or about $583 per square foot, and 1200 Park Place offices went for $40 million, or approximately $655 per square foot. The retail portion at 1010-1016 Park Place, consisting of a grocery store and shopping center, sold for approximately $48.3 million, or about $991 per square foot.

Elsewhere at Bay Meadows, video game company Roblox expanded its headquarters by 68,334 square feet for a total of 750,000 square feet of offices. Zynga, another video game developer, has its headquarters in most of the 62,000-square-foot 1200 Park Place building, while Essex Property Trust is the main tenant at 1100 Park Place.

— Chris Malone Méndez