A Los Altos-based real estate investor faces foreclosure for the second time for the site of an approved 11-story hotel in West San Jose.
Adeel Mahmood, head of Villa Developers & Investment, has a delinquent loan that could go to auction on the property at 2850 Stevens Creek Boulevard, the San Jose Mercury News reported.
The property on a prime site near Westfield Valley Fair mall and down the street from Santana Row fell into loan delinquency and faces foreclosure for the second time in slightly more than a year.
The parcel containing a working gas station hit the market last May for $12.8 million in a package deal with an adjacent property owner. Mahmood had tried to sell the hotel-approved site for $20 million before the 2020 coronavirus pandemic slammed the hotel industry.
First Credit Bank, the site’s lender, filed a notice of default against the Mahmood-led affiliate, according to the Mercury News, citing public records.
The real estate affiliate defaulted on a $6.7 million loan that it obtained from First Credit Bank in 2019, the same loan that went into default in October 2021.
The property faced a foreclosure auction in February 2022 and could have been sold to the highest bidder. But prior to that auction, Mahood managed to rescue the property from default.
Mahmood then put the property up for sale last spring. In 2021, he tried to sell the site for $20.5 million.
The latest default filing says the Mahmood affiliate owes $7.8 million that would have to be repaid in full. If not, foreclosure and auction could befall the property.
Approved plans for the site called for an 11-story boutique hotel with 175 rooms. Although the city had approved the project, the development wasn’t viable enough to attract a construction loan.
Mahmood bought the property at Interstate 880 and Stevens Creek Boulevard for $2.4 million in 2015. A few years after buying the site, the principal executive of Villa Developers & Investment transferred the property’s ownership to the real estate affiliate.
San Jose officials are seeking higher densities along Stevens Creek Boulevard between Interstate 880 and Winchester Boulevard.
Cypress Equities, based in Dallas, has moved forward with plans to build a 295,000-square-foot office tower and an adjacent fitness center on Stevens Creek Boulevard.
— Dana Bartholomew
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