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 and Wild Palms Hotel sites 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.
The hotels that are scheduled for an auction are Wild Palms Hotel, with 208 rooms, at 910 E. Fremont Ave. in Sunnyvale; and Hotel Avante, with 91 rooms, at 860 E. El Camino Real in Mountain View.
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.
Two veterans of the hotel sector, 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 sold at that time.
It’s also possible that the lender could take back the hotels through a foreclosure.
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, a Mountain View hotel with 91 rooms located at 860 E. El Camino Real. // Google Maps
At present, the hotels in the Bay Area known to be in financial distress of one variety or another include:
— Fairmont San Jose, an 805-room hotel in downtown San Jose. Bankruptcy.
— Hyatt House Pleasant Hill, a 142-room hotel in Pleasant Hill. Delinquent loan package.
— Hyatt House Pleasanton, a 128-room lodging in Pleasanton. Delinquent loan package.
— Club Quarters Hotel, a 346-room hotel in San Francisco. Delinquent loan package.
— Four Points by Sheraton, north San Jose, 196 rooms. Bankruptcy case.
— Holiday Inn Hotel & Suites, San Mateo, 220 rooms. Bankruptcy case.
— Park James Hotel in Menlo Park, 61 rooms. Seized in February 2021 through foreclosure of a loan. PJ Hotel, an affiliate of Illinois-based Bixby Bridge Capital, now owns the upscale boutique hotel.
— Hotel Avante, a 91-room lodging in Mountain View. Mortgage loan default.
— Wild Palms Hotel, a 208-room hotel in Sunnyvale. Mortgage loan default.
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.
“The Wild Palms Hotel property realizes 71.2% of its occupied room nights from corporate clients, which accounts for 67.9% of the revenue at the Wild Palms Hotel property,” the analysis said.
Google, Yahoo, Hewlett Packard, Apple, Juniper Networks, and Amazon were listed as among the principal corporate clients of the Wild Palms. Google, Intuit, Symantec, LinkedIn, Microsoft, Yahoo, and AOL were listed as the primary corporate visitors to the Avante, according to the SEC documents.
“The Hotel Avante property realizes 78.7% of its occupied room nights from corporate clients, which results in 76.8% of the revenue at the Hotel Avante property,” the SEC documents stated.
Originally Appeared On: https://www.mercurynews.com/2021/04/26/covid-real-estate-two-silicon-valley-hotels-auction-foreclosure