A developer has received $1.23 million in financing to build a 137-unit, mixed-use apartment complex to replace blighted offices facing foreclosure in West San Jose.
Kochland, an affiliate controlled by Kenneth Ryan Koch, received two loans to build the five-story apartment building at 826 North Winchester Boulevard, the San Jose Mercury News reported. Lenders for the project were not disclosed.
The vacant two-story office building, now covered with graffiti and surrounded by a chain link fence, would be demolished. Since the start of the pandemic, the Winchester Professional Building has had three owners and faced two foreclosure proceedings.
The 11,700-square-foot building north of the Westfield Valley Fair and Santana Row malls was seized through foreclosure in 2021. In December of that year, Koch, a resident of Grass Valley, bought the L-shaped building for $10.75 million.
He then failed to repay its loan of $6.45 million, according to its lender, Sacramento-based Socotra REIT, and the site was slated to be auctioned on Jan. 6. But the foreclosure sale was canceled after Koch landed the loans in late December, according to the Mercury News.
In March 2020, Kenneth Colbert, a Redondo Beach-based investor, paid $8.25 million for the building after securing a loan for $6.1 million. After the property’s mortgage became delinquent, the building was auctioned off through a foreclosure proceeding.
In June 2021, a group led by Los Gatos-based Sridhar Capital paid $2.9 million at auction to buy the offices, built in 1958. Two recent owners had planned housing at the 0.6-acre site.
Last year, Colbert’s group proposed a mixed-use complex with ground-floor shops and restaurants. In May, Koch’s group proposed a five-story mixed-use housing complex.
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Plans by Koch call for a 137-unit apartment complex with 3,200 square feet for a shop or restaurant.
In a separate real estate proceeding on Jan. 25, two Los Gatos commercial properties that Koch owns through a different affiliate were seized by the lender in a $7 million foreclosure auction.