Default Looms for Two More Bay Area Hotels

It’s another week of hotel loan failures in the Bay Area as two more lodging properties face default.

Wild Palms Hotel in Sunnyvale and Hotel Avante in Mountain View received a notice of default demanding payment in full for a $54.1 million loan, the Mercury News reported, citing documents filed on Monday with the Santa Clara County Recorder’s Office.

A Rialto Capital Management affiliate provided the loan to the 208-room Wild Palms Hotel at 801 East Fremont Avenue in Sunnyvale and the 91-room Hotel Avante at 860 East El Camino Real in Mountain View in December 2021.

It isn’t the first time the Wild Palms and Avante hotels have dipped into default and been confronted with the threat of foreclosure. Both hotels received a notice of default in 2020. That default was rescinded in June 2021 after a lender almost seized the properties, according to the Mercury News. The loan that is now in default matured on Jan. 9; at that time, the loan became due in full.

The properties are owned by affiliates led by hotel and real estate veterans Stephen Conley and Jeffrey Eisenberg. Conley is the founder and former CEO of Joie de Vivre Hospitality, while Eisenberg has owned multiple hotels in the Bay Area, according to the Mercury News.

The latest default notice came after the two hotels saw an uptick in revenue over the past year. In the first quarter of last year, the hotels generated a combined revenue of $860,500 each month, up 6.4 percent from the per-month revenue of $808,400 for all of 2024, which itself was up 18.3 percent from the per-month revenue of $686,400 during 2023, according to Morningstar data cited by the Mercury News.

Hotels in San Francisco and around the Bay Area have flopped into default over the past year as property owners fail to meet their payment obligations.

Last March, Cook Children’s Health Care Services took ownership of a 276-room dual-branded hotel at 1431 Jefferson Street in downtown Oakland through a deed-in-lieu of foreclosure of a $112 million loan, according to the Mercury News. In May, the 541-room Signia by Hilton hotel in downtown San Jose was taken back by its lender through a foreclosure that valued the hotel at $80 million.

The following month, a Motel 6 and Super 8 by Wyndham in San Jose defaulted on a $21.7 million loan. In July, Oakland’s largest hotel, the 500-room Oakland Marriott City Center, was seized by its lender in a $70.2 million foreclosure of a delinquent loan. A month later, the 172-room Moxy Oakland Uptown hotel fell into default on a $35 million loan; that hotel has since closed its doors.

— Chris Malone Méndez