Lender buys site of Fremont mixed-use project from bankrupt developer for $40M

Project’s principal developer filed for bankruptcy twice, and site has sat fallow since 2019

San Francisco /
Feb.February 09, 2022 11:26 AM
Paul Rahimian with Mission Hills Square ( Multi-Housing News, iStock)
Paul Rahimian with Mission Hills Square (Multi-Housing News, iStock)

A mixed-use project in Fremont that’s sat undeveloped since 2019 and whose principal developer filed for bankruptcy twice sold to one of its lenders for $40 million.

Los Angeles’ Parkview Financial acquired the site of Mission Hills Square, approved for 158 apartments and almost 54,000 square feet of room for shops and restaurants, the Mercury News said. The deal was recorded at the Alameda County Clerk-Recorder’s Office on Feb. 2. The seller was Gadsden Growth Properties, which bought the almost 13-acre site at 2501 Cormack Road, and Fremont Hills Development, the company that owned it, for about $240 million in cash and stock in 2019, the newspaper said.

Fremont Hills Development, Mission Hills’ principal developer, and Golden State Regional Center broke ground on the project in 2017. It’s since been beset by legal troubles tied to both companies. Its value upon completion has dropped almost 16 percent over the past three years to about $138 million, according to a March appraisal by Joseph J. Blake and Associates that the firm filed with a federal bankruptcy court.

Located near Interstate 680, Mission Hills started running into trouble in October 2018, when the Securities and Exchange Commission filed a civil complaint against Atherton residents Danghong Chen and Jianyun Ye as well as other people and entities involved in the site’s ownership and development, alleging fraud and other violations, the Mercury News said. Chen and Ye controlled Fremont Hills and the Regional Center and advised clients to invest in Mission Hills without disclosing their ownership interest in it, the SEC said.

Chen fled the U.S. shortly after the SEC filed its complaint, the Mercury News said. A federal grand jury indicted her and Ye for alleged visa fraud and other misdeeds in March 2019. Ye pleaded not guilty in U.S. district court, the newspaper said.

Gadsden’s purchase of Mission Hills and Fremont Hills in February 2019 didn’t solve the project’s issues. The company said in a November 2019 SEC filing that there was “substantial doubt” about its ability to stay afloat.

About a year later, Fremont Hills, which became a unit of Gadsden after the company acquired it and the Mission Hills site, filed for Chapter 11 bankruptcy to limit any risk of a foreclosure action on the project by its primary mortgage lender. Fremont Hills filed for bankruptcy a second time in February 2021, the Mercury News said.

Mission Hills, meantime, remains stuck in limbo. Graffiti is “prominent” and debris blocks one of its construction entrances, the newspaper said in 2020.

[The Mercury News] — Matthew Niksa





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