Historic Hayes Mansion may undergo facelift
$27.8 million deal a ‘new vision’ for property constructed in 1905
SAN JOSE >> The historic Hayes Mansion in south San Jose has been bought by investors who aim to restore the hotel and conference center in a deal that lifts a financial burden from the city’s shoulders.
JMA Ventures, acting through an affiliate called 200 Edenvale Hotel, bought the Hayes Mansion property on Feb. 5, paying $27.8 million, according to Santa Clara County property records.
“With this deal there is new ownership and new vision for Hayes Mansion,” said Nanci Klein, San Jose’s assistant director of economic development. “This will create employment stability for union workers at the site. There is going to be an upgrade of the facilities.”
JMA Ventures is expected to spend $15 million on upgrades at the Hayes Mansion, according to Klein. Klein added that JMA has reached a labor agreement with the Unite Here union.
“We anticipate significant improvements,” she said.
The main building on the property, constructed in 1905, has been deemed a historic structure but fell into disrepair in the 1970s and 1980s, according to a city staff report. The city bought the property in 1984 from the now-defunct San Jose Redevelopment Agency and undertook three expansions from 1991 through 2002.
But the city wound up providing subsidies that ranged from $2 million to
$6 million a year, a financial squeeze unleashed by the Great Recession and a slump in revenue.
San Jose officials believe the sale of the Edenvale Avenue hotel and conference center will erase the need for subsidies, eliminate all long-term debt, repay a loan from Devcon of $1.2 million, and assure an ongoing stream of hotel taxes for the city. The city also believes it will be able to capture $5 million that will be left over once the debts and loan are paid off.
The new owners already control a portfolio of distinctive properties in varied markets.
“JMA Ventures is a San Francisco-based real estate investment firm, whose portfolio includes hospitality properties, along with residential, retail and office developments,” according to a city staff memo.
In the Bay Area, JMA Ventures owns Fairmont Heritage Place, perched above historic Ghirardelli Square in San Francisco, and the Waterbar seafood restaurant along the Embarcadero. Fairmont Heritage Place offers residences and hotel rooms in a boutique lodging.
JMA also owns the Homewood Resort and Westshore Cafe and Inn, both on the western shores of Lake Tahoe.
The Hayes Mansion, which has 214 rooms and 33,000 square feet of conference space, could be wellpositioned to prosper in a Silicon Valley lodging market with a relatively tight supply and high demand.
“Vacancy rates are very low,” Klein said. “This is a real opportunity for the Hayes Mansion. Many people want to stay in hotels like the Hayes Mansion that are distinctive and unique.”