Two Silicon Valley hotels head for auction block and foreclosure
SUNNYVALE >> Two Silicon Valley hotels are headed for the auction block and foreclosure, fresh evidence that economic ailments unleashed by the coronavirus still sicken the hospitality industry.
The lender that holds the mortgage on the hotels, one in Sunnyvale and one in Mountain View, has scheduled a public auction for the two properties, which would be a prelude to a loan foreclosure and seizure, according to property documents filed on April 20.
The property owners of the Hotel Avante, 860 E. El Camino Real in Mountain View, and the Wild Palms Hotel, 910 E. Fremont Ave. in Sunnyvale, defaulted in October 2020 on a $37 million loan that was provided by Cantor Commercial Real Estate Lending in 2014, Santa Clara County documents show.
“This is a sign that lenders are losing patience and taking a more proactive approach with their borrowers, especially the ones that are severely delinquent,” said Alan Reay, president of Atlas Hospitality Group, which tracks the lodging sector.
The total amount owed on the loan as of the most recent filing on April 20, including principal, unpaid interest, and other fees, was $43.7 million.
An analysis of the hotels a few years ago showed that both the Wild Palms Hotel and the Hotel Avante are part of the Joie de Vivre hotel group, which is a boutique chain that’s owned by Hyatt Hotels. Hyatt completed a purchase of the Joie de Vivre group in 2019.
Hotel industry veterans Stephen Conley and Jeffrey Eisenberg head up affiliates that are the owners of the hotel properties in default.
Conley is the founder and former chief executive officer of the Joie de Vivre Hospitality firm, which under Conley’s leadership became the nation’s largest boutique hotel chain, according to the 2014 assessment of the hotels.
Eisenberg, the owner of a portfolio of Bay Area hotels, also is an executive with AREA Real Estate Partners, a realty fund.
The last time Hotel Avante and Wild Palms Hotel were formally appraised, they had a value of $57.7 million, according to hotel industry experts.
The auction was scheduled for the end of May, the property documents show. If any bidders emerge at the public auction, it’s possible for the hotels to be bought on the spot.
Another frequent outcome of a public property auction: The lender could take back the hotels through a foreclosure deed.
Health concerns posed by the spread of the coronavirus have prompted numerous tech companies and other corporations to chop their travel activity.
The resulting fallout has eviscerated the finances of a growing number of hotels.
Hotel Avante and Wild Palms Hotel, both located next to major tech hubs in Silicon Valley, rely greatly on patronage from high-tech companies in the vicinity, according to an analysis of the hotels that filed with the Securities and Exchange Commission in 2014 by a mortgage trust.