SAN JOSE — A giant lodge advanced in San Jose has staggered right into a mortgage default, a setback that may be a reminder the Bay Space lodging sector’s post-coronavirus maladies have but to run their course.
The 204-room lodge web site going through a mortgage delinquency consists of a Motel 6 and a Tremendous 8 by Wyndham positioned at 2560 Fontaine Highway close to the interchange of U.S. Freeway 101 and Tully Highway in south San Jose.
204-room lodge advanced at 2560 Fontaine Highway in east San Jose that features a Tremendous 8 by Wyndham and a Motel 6. Picture taken on June 9, 2025. (George Avalos/Bay Space Information Group)
The lodging property is in default on a $21.7 million mortgage that Alternative Inns Worldwide has offered, in line with paperwork filed on June 6 with the Santa Clara County Recorder’s Workplace.
An affiliate headed up by Texas-based lodging govt Jagmohan Dhillon obtained the mortgage in August 2024 from the Alternative Inns group, county actual property recordsdata present.
The 2560 Fontaine lodge property is one in every of a number of lodging websites within the Bay Space that associates managed by non-public fairness agency Blackstone Group offered lately to an array of consumers.
“Blackstone being Blackstone, they sold at the right time in retrospect,” stated Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market.
Dhillon-led entities purchased a few of these from Blackstone-controlled associates lately.
“There was a lot of demand for those Motel 6 hotels,” Reay stated. “The prices really got bid up.”
Two of the lodge properties owned by Dhillon-led associates, one in Livermore and the lodge advanced on Fontaine Highway in south San Jose, have flopped into mortgage defaults.
The Dhillon affiliate that owns the Livermore lodge has filed for chapter simply forward of a foreclosures continuing that the property’s lender seeks to orchestrate.
In 2022, a Dhillon affiliate paid $29.9 million to the Blackstone subsidiary for the 204-room south San Jose lodge properties on Fontaine Highway, county property recordsdata present.
The San Jose lodge web site’s property taxes that have been due in 2024 have turn out to be delinquent, in line with actual property data present as of June 1 of this 12 months.
This mortgage default for the south San Jose lodge is only one of a widening array of monetary woes that loom over the Bay Space lodging trade.
— Oakland’s largest lodge, the 500-room Oakland Marriott Metropolis Middle at 1001 Broadway within the downtown district, went into default in February resulting from a delinquent $100 million mortgage. A foreclosures public sale is on the horizon.
— Throughout the road in downtown Oakland, the Courtyard Oakland Downtown was purchased by Core Capital for $10.6 million, one-fourth of the $43.8 million that the vendor, a Gaw Capital Companions affiliate, paid in 2016, in line with paperwork filed in October 2024 with the Alameda County Recorder’s Workplace.
— A dual-brand 18-story lodge tower at 1431 Jefferson Avenue in downtown Oakland was taken again by its lender by a deed in lieu of foreclosures submitting that acknowledged the unpaid debt on that lodge was $117 million.
— In downtown San Jose, the South Bay metropolis’s largest lodge, the Signia by Hilton, was seized by its lender by a foreclosures that valued the downtown lodge at $81 million — far lower than a latest appraisal.
San Francisco’s lodge woes are much more extreme, with enormous lodges struggling mortgage delinquencies and foreclosures.
Park Inns & Resorts has ceased making funds on a $725 million mortgage that had two main San Francisco lodges as collateral: the 1,921-room Hilton San Francisco Union Sq. and the 1,024-room Parc 55 San Francisco.
In 2023, the historic 135-room Huntington Lodge, perched on San Francisco’s legendary Nob Hill, was purchased by a foreclosures. The brand new proprietor paid about $29.3 million — a value that was roughly one-third the lodge’s assessed worth of $87.6 million on the time of the foreclosures continuing.
As for the south San Jose lodge on Fontaine Highway, a mix of things might have mixed to place the combo Motel 6 and Tremendous 8 lodging property into monetary misery, in Reay’s view.
“It’s partly a reflection of the slowdown in the hotel market,” Reay stated. “But it’s also the price they paid and the high level of debt on the hotel at high interest rates.”
Initially Printed: June 10, 2025 at 9:15 AM PDT
