Z&L Properties, a China-based developer whose chief executive was arrested in London in connection with a San Francisco corruption case, has listed the site of an approved double-highrise in Downtown San Jose.
The company, run by Zhang Li, is selling the former Greyhound bus property at 70 South Almaden Avenue, which was to be replaced by twin 20-story towers with 708 units, the San Jose Mercury News reported. An asking price was not disclosed.
Zhang was detained in the British capital last month in connection with a U.S. investigation into possible kickbacks and bribery involving a project in San Francisco. He was released after paying 15 million British pounds in bail.
Z&L Properties was approved by the city of San Jose six years ago to build the towers and 14,000 square feet of shops and restaurants at South Almaden Avenue and Post Street, but the developer allowed the permit to expire.
The property, then deemed an important part of efforts to revitalize the area, has since been deemed a prime location in Downtown San Jose.
“Putting the Greyhound station site on the market and a transaction to buy it is inevitable,” Bob Staedler, principal executive of Silicon Valley Synergy, a land-use consultancy, told the Mercury News. “If you look at their track record, Z&L just doesn’t have the wherewithal to develop properties.”
Brokers Jef Henderson and Jon Teel of CBRE hold the listing. CBRE’s Andrew Behrens and Jesse Weber are providing debt and finance expertise.
“This property is in the epicenter of growth and development in downtown San Jose,” Teel said.
Z&L Properties has struggled with its Bay Area real estate portfolio, completing just one project, a double-tower, 640-unit highrise in Downtown San Jose near San Pedro Square. Only one tower is available for occupancy.
The company has also proposed a pair of housing highrises and the preservation of a historic church at 252 North First Street in San Jose. Neither tower has been built and the church is covered by a black tarp.
In 2021, Z&L Properties sold a 1.6-acre property development site near Terraine and Bassett street in the North San Pedro neighborhood for $11.4 million, after plans for a 313-unit tower stalled.
Zhang, a real estate tycoon in charge of Z&L, is co-founder of R&F Properties in Guangzhou, China, now trying to restructure debts and negotiate with bondholders.
As of last summer, Z&L owed $2 million in back taxes on The Oak, a boarded-up 109-unit condo tower at 55 Oak Street in San Francisco. Other projects in the city were also not completed.
Z&L acquired 12 projects in the Bay Area and Los Angeles in 2014 and 2015, during the peak of the China property mania, and was planning to build 3,400 high-end condos. Four of those properties are in San Francisco, including The Oak, according to GSI Exchange.
Zhang was caught up in the federal corruption case against former San Francisco Public Works Director Mohammed Nuru, who was indicted in January 2020 on public corruption charges.
The indictment states that Nuru had met the developer in China on multiple occasions and that Zhang had showered him with gifts and put him up for free at five-star hotels. In exchange, Nuru “used his official influence with other city officials to solve problems” the developer encountered, according to the San Francisco Chronicle.
A court in London was told last month that Zhang was wanted in the United States over an investigation into the payment of bribes to San Francisco city officials linked to the granting of permits for a project in that city.
— Dana Bartholomew
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