Sand Hill Skirts Default on Loan for Mountain View Building

Sand Hill Property has dodged default on a $49 million loan tied to a 99,600-square-foot office building in Mountain View.

SHP Middlefield, an affiliate of the Palo Alto-based developer led by Peter Pau, cut a deal with its lender to tear up the default notice against the three-story building at 590 East Middlefield Road, the San Jose Mercury News reported.

Deutsche Bank AG New York Branch has now canceled the loan default on the property, according to county documents filed this month.

The Sand Hill Property affiliate paid $80 million for the Class A office building in 2018, when Deutsche Bank issued the $48.75 million loan.

Sand Hill Property was in discussions with Deutsche Bank for some time before the lender agreed to rescind the loan default, according to Pau, principal executive and co-founder of Sand Hill. Terms of the deal were not disclosed.

“These days, values and loans are upside down,” Pau told the Mercury News in September during an interview about the 590 East Middlefield property.

The occupancy of the building was not disclosed. Office availability in Silicon Valley at the end of last year was a record 27.5 percent, according to Savills.

Sand Hill Property has been among the more successful developers in Silicon Valley.

Last month, the firm won approval to build nearly 2,700 homes at a 51-acre urban retail village at 10123 North Wolfe Road in Cupertino. The $4 billion development will replace the long-closed Vallco Mall.

In January, Sand Hill upgraded plans for an urban retail village with nearly 900 homes at 1312 El Paseo De Saratoga and 1777 Saratoga Avenue in southeast San Jose. The 167,000-square-foot project would replace the El Paseo Shopping Center.

In June, an affiliate of the firm paid $26.5 million for a GMC car dealership in Los Gatos to amass a 7.4-acre swath that includes plans for a Whole Foods Market at 15480 and 15500 Los Gatos Boulevard.

Sand Hill Property, founded by Peter and Susanna Pau in 1988, has developed more than 65 projects with 20 million square feet across Silicon Valley, from stand-alone stores to multi-use city centers, according to its website.

— Dana Bartholomew