SAN JOSE — One of the loans for a landmark hotel tower in downtown San Jose is up for sale, but wide-ranging efforts are underway to inject fresh cash into the lodging hub to brighten its financial picture.
JLL, a commercial real estate firm, is seeking a buyer for one of the loans for the Signia by Hilton hotel, one of downtown San Jose’s most important hotels and a crucial propellant in the quest to help the city’s urban core recover from the coronavirus.
A marketing brochure that JLL is circulating says the loan that’s up for sale is “non-performing,” which can mean Brightspire Capital, the hotel’s lender, has not received all of the payments that are due on the hotel.
The hotel tower could soon have a greatly different and improved financial structure, according to sources familiar with the commercial property market in the South Bay.
New financing is being arranged that would recapitalize the hotel’s finances and place the property on a solid monetary footing, according to the sources, who asked not to be identified because they are not authorized to officially discuss the situation.
The Signia by Hilton hotel at 170 South Market Street has 541 rooms and is one of the lynchpins of the lodging market in Silicon Valley.
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The hotel’s ownership group declined to comment about the situation.
The goal of the recapitalization is to find a new lender and financing package for the hotel property.
The hotel’s current financing package totals about $165.3 million, consisting of a $136 million primary loan and the $29.3 million secondary loan that’s being floated for sale, according to the JLL marketing materials.
In November 2023, the 264-unit former south tower of the hotel was bought by a Bay Area real estate firm that is in the final stages of a project to convert the facility to housing for San Jose State University students.
Mill Valley-based Throckmorton Partners, acting through an affiliate, paid $73.1 million to buy the south tower. That purchase price is part of an overall package valued at $113 million that includes wide-ranging upgrades and construction efforts to convert the tower to SJSU residences ahead of this year’s fall semester.
In recent years, the northern tower has been dramatically revamped. In 2022, the legendary Hilton chain began managing and operating the hotel.
“The property has undergone comprehensive renovations through 2021 to 2024 and a conversion to a globally recognized, luxury hotel brand in April 2022,” the JLL marketing brochure said.
The renovation includes all the rooms, the lobby, common areas and the addition of new dining options.
“The property benefits from numerous amenities including a cutting-edge fitness center, 37,076 square feet of meeting space, and an expansive rooftop pool with skyline views,” the JLL brochure stated.
The hotel is also deemed to be in an excellent location in downtown San Jose.
“The property is poised to benefit from the strong lodging fundamentals within the San Jose-Santa Cruz market,” the JLL brochure stated.
