With a lender poised to foreclose on the Signia by Hilton San Jose hotel, owner Sam Hirbod thinks he has landed a financing deal to save it.
The head of San Ramon-based Eagle Canyon Capital said he has a deal with undisclosed lenders to refinance the delinquent loan linked to the 541-room hotel at 170 South Market Street, the San Jose Mercury News reported.
Hirbod’s ownership group bought the former 805-room Fairmont San Jose in 2018 for $223.5 million, then sank $75 million more in upgrades. BrightSpire Capital originated a $185 million loan tied to the property.
Three years later, the hotel fell into bankruptcy and closed its doors, saying business shutdowns and travel restrictions from the pandemic had ruined its bottom line. The hotel reopened in 2022.
A year ago this month, Hirbod’s Eagle Canyon sold the hotel’s 13-story, 264-room south tower to Mill Valley-based Throckmorton Partners for $73.1 million, or $276,894 per room, which converted it to student housing for San Jose State University.
Eagle used the proceeds to pay down part of the BrightSpire loan. In August, the hotel owner was close to refinancing the $165.3 million in debt.
In a move that could trigger a foreclosure of the hotel’s loan, BrightSpire has filed a notice of default and has scheduled an auction of the hotel as early as next month. The date that Eagle stopped making its mortgage payments was undisclosed.
Hirbod thought he had secured fresh capital with a new undisclosed lender — but the terms were so onerous Eagle and Hilton decided to walk away from the deal, according to the Mercury News.
Now, a new deal with top-notch undisclosed lenders has materialized, according to Hirbod, who said hotel occupancy was 73 percent last month and 70 percent and above this month, while operating in the black.
“We have four lenders that are looking to provide the financing and at better terms,” Hirbod told the newspaper. “Hilton has agreed to step up and support these efforts.”
“We will never allow the foreclosure sale to happen,” Hirbod added. “We would file a forced Chapter 11 and reorganize the hotel’s finances.”
— Dana Bartholomew