Receiver seizes San Jose office building after Vista’s $24M default

A court-appointed receiver has seized a 99,400-square-foot office building in North San Jose after Vista Investment Group defaulted on a $23.8 million loan.

The unidentified receiver took the keys from the Santa Monica-based landlord, which defaulted on the loan linked to the neglected building at 3100 North First Street, the San Jose Mercury News reported.

Late last month, a San Francisco County court authorized the receiver to assume maintenance of the building and find a tenant, according to an order signed by Judge Charles Haines.

Vista, led by Philip and Jonathan Barach, bought the property in 2015 and refinanced it three years later with a $25 million loan from East West Bank. 

The company then failed to repay $23.8 million when the loan matured in October, triggering a default. As of Dec. 28, Vista owed $24.3 million on the loan, including principal, interest, late fees and penalties.

The Pasadena-based bank filed a lawsuit against Vista as part of the foreclosure process.

The 21-year-old building had been leased to San Jose-based Broadcom through 2019. The building was last leased to Nio USA, a unit of China-based Nio, a maker of electric vehicles. 

Nio USA, which rented the building in 2018, moved out in October — the same month Vista allowed the mortgage loan to become delinquent.

Nio had advised Vista in August 2022 that the EV maker intended to exit the property upon the conclusion of the lease. Vista then distributed $2 million in rent to its firm’s equity investors and affiliates, according to the San Francisco County court records.

When it walked away from the building, Vista left behind a stuck elevator, an expiring fire system monitor, a broken card access system and no burglar alarm.

This decision by Vista “clearly impacted on the borrower’s ability to now pay for these essential services which are necessary to protect and preserve the property,” representatives of East West Bank stated in the court records, referring to a stuck elevator and difficulties with the fire, burglar alarm and other systems.

It wasn’t immediately clear whether the neglected parts of the building had been fixed.

“Plaintiff (East-West Bank) and its officers, employees and agents shall have immediate access to the property to enable them to view and inspect the property for purposes of appraisal,” the San Francisco court order states.

Vista, founded in 2008, has acquired more than 2,500 apartments and 2 million square feet of offices in California, the Pacific Northwest, Colorado and Texas, according to its website.

— Dana Bartholomew

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