The firm that loaned defunct co-living startup Starcity millions of dollars to buy a downtown San Jose site for an 800-unit project seized the property through a foreclosure sale, paying $100,000 after no other takers emerged.
An affiliate of New York’s Arena Investors is the new owner of a 0.8-acre parcel at 199 Bassett Street in the North San Pedro neighborhood, the Mercury News said. Arena loaned San Francisco’s Starcity almost $15 million in 2019 to help an affiliate of the startup acquire the Bassett Street site for $18 million, the newspaper said. The Starcity affiliate put the property up as collateral for the loan, enabling Arena to seize it to satisfy any delinquent debt.
The asset manager filed a notice of default on the loan at the Santa Clara County Clerk-Recorder’s Office in June. Starcity owed more than $13 million on its mortgage as of August, the Mercury News said.
The company planned to raze the existing industrial building at 199 Bassett Street and build an 18-unit, 803-unit co-living project, where multiple residents would share an apartment with separate bedrooms and shared living quarters. It never broke ground after acquiring the site in February 2019, and it sold most of its building management agreements to co-living rival Common in June, paving the way for its eventual dissolution.
That deal, terms of which neither company disclosed, didn’t include Starcity’s active developments in San Francisco or in San Jose. Jon Dishotsky, the startup’s then-CEO, told the San Francisco Business Times in June that the sites of those projects were either already for sale or will be soon.
Starcity’s plan to build what it touted as one of the world’s largest co-living projects in San Jose also was beset by legal troubles. Developer KT Urban, which sold the Bassett Street site to Starcity, sued it in May 2020 for allegedly failing to pay off a $6 million unsecured note by its maturity date. C2K Architecture, which Starcity retained to design its San Jose project, sued it in August 2020 for more than $1.5 million in allegedly unpaid compensation.
Starcity denied all of KT Urban’s allegations, and Dishotsky declined to comment on C2K’s suit when it became public last year.
The Santa Clara County Superior Court held a trial-setting conference for C2K’s case in January, but Starcity representatives didn’t attend, court documents show. A judge scheduled a second conference for Feb. 22 and ordered the defendant to explain why it was absent from the first one.
As for KT’s suit, the company and members of the Starcity affiliate named in its complaint are scheduled to meet on March 1 for a case management conference, according to court records.
[The Mercury News] — Matthew Niksa
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Site of San Jose residential project faces foreclosure auction