A lender seized control of an unfinished San Jose retail complex that was meant to bring retail and services to people in an adjacent housing development.
Secured Income Fund II, which provided $6 million in financing in 2019 for the 15,500-square-foot development, took ownership through a foreclosure, the East Bay Times reported. The project runs along a busy strip of Monterey Road, between Montecito Vista Drive and Esfahan Drive.
The lender filed a notice of default in May, saying the developer, a group led by Adeel Mahmood, was delinquent on $7.2 million, including finance charges, late fees and penalties. It paid an additional $1 million to take control.
The exterior of the two-building retail and commercial center was completed. The interior wasn’t finished.
One of the biggest roadblocks for the development was limited space, said David Taxin, a partner at commercial real estate firm Meacham/Oppenheimer.
“The parking is very limited and if any stores had ever opened, customers would have to walk down the side streets and enter in the back, not on Monterey,” Taxin said. “That is very inconvenient for customers.”
Also, construction costs, including what would be required to complete the interiors and clean up the surrounding areas, would have led to high rental rates for tenants, according to Taxin.
Lenders rarely continue to develop properties they have taken back through foreclosures, so Secured Income may seek to sell the site.
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[EBT] — Victoria Pruitt