Hyatt House Hotels in East Bay Sell at Foreclosure

As loan defaults and foreclosures plague hotels across the East Bay, two lodging properties in the area have new owners after foreclosing last year.

Hyatt House Pleasant Hill at 2611 Contra Costa Boulevard in Pleasant Hill and Hyatt House Pleasanton at 4545 Chabot Drive in Pleasanton were acquired at an auction in late March for bargain-basement prices, the Mercury News reported. The buyers’ identities were not disclosed.

The 142-key Hyatt House Pleasant Hill traded hands for $3.5 million, or $26,600 per room. The 128-key Hyatt House Pleasanton was auctioned off for $800,000, or roughly $6,250 per room. The eye-popping numbers are “shocking” as the two Hyatt House properties “would easily cost $300,000 to $400,000 a room to build today,” Alan Reay, president of Atlas Hospitality Group, which tracks the California lodging market, told the Mercury News.

For evidence of just how far the local market has fallen over the past year, look to the sale of the historic Hotel De Anza in downtown San Jose in 2024. That 100-room hotel sold for $11.5 million, or $115,000 per room. The declining sales numbers will likely impact other hotels in the market, Reay said.

The Pleasant Hill and Pleasanton hotels aren’t the only Hyatt House properties in California to fall into foreclosure over the past year. In September, the Hyatt House hotel in East Los Angeles was headed to foreclosure after defaulting on a $61.5 million loan, The Real Deal previously reported.

Hotel owners across the region have failed to meet payment obligations, leading to lender seizures and foreclosure auctions that have decimated hotels’ property values. Last March, Cook Children’s Health Care Services acquired a 276-room dual-branded hotel in downtown Oakland through a deed-in-lieu of foreclosure of a $112 million loan. In May, a lender took back the 541-room Signia by Hilton hotel in downtown San Jose through a foreclosure proceeding. The following month, a Motel 6 and Super 8 by Wyndham in San Jose defaulted on a $21.7 million loan. In July, a lender seized Oakland’s largest hotel, the 500-room Oakland Marriott City Center, in a $70.2 million foreclosure of a delinquent loan. And last month, KSL Capital Partners acquired the Toll House Hotel in Los Gatos through a deed-in-lieu of foreclosure, while the Wild Palms Hotel in Sunnyvale and Hotel Avante in Mountain View received a notice of default on a $54.1 million loan.

The decimation of hotel values could end up putting city budgets in jeopardy as revenue streams from property taxes could dry up. “All of a sudden, you are going to find that property tax revenues for cities, counties, and school districts are going to be plummeting,” Reay said. “Public agencies are going to be faced with slashing their budgets, cutting employees, raising taxes.”

— Chris Malone Méndez