Closed downtown San Jose hotel targets reopening in early 2022: lender
SAN JOSE – An iconic downtown San Jose hotel is set to reopen in the first months of 2022, a key lender has told investors and regulators.
Operated for over 30 years as Fairmont San Jose, the 805-room hotel filed for bankruptcy and closed in March 2021.
After coming out of bankruptcy in August 2021, the double-tower hotel was renamed under the new name Signia Hilton San Jose.
Now the hotel could be heading towards a reopening date in early 2022, BrightSpire Capital, the hotel’s main lender of property, disclosed in a regulatory brief released on November 3. In the filing with the Securities and Exchange Commission, BrightSpire referred to the property as the San Jose Hotel.
“The San Jose hotel is slated to reopen in the first quarter of 2022,” BrightSpire said in the SEC document.
BrightSpire Capital executives said the hotel’s primary owner, a group led by East Bay business executive and real estate investor Sam Hirbod, was able to close bankruptcy quickly. The group led by Hirbod was the borrower of the BrightSpire financing.
“We applaud the borrower’s efforts to get out of bankruptcy quickly,” Michael Mazzei, CEO of BrightSpire, told Wall Street analysts on a Nov. 3 conference call.
The lender also noted that the Hirbod-led group continued to pump money into hotel property even during bankruptcy proceedings and throughout the coronavirus-related slowdown for leisure, travel, and other activities. catering and hospitality.
“We applaud the borrower’s efforts to continue financing the property, which is why we have remained loyal to this borrower,” Mazzei said. “We did not charge this borrower with default interest during this period as that was our position during COVID. “
In August, a federal judge ended the bankruptcy by approving a confirmation plan to reorganize the hotel’s finances.
Shortly after the bankruptcy began, the hotel owner terminated his management contract with Accor Management US in order to pave the way for Signia Hilton to become the new manager and operator of the hotel.
A big hurdle to reorganizing the hotel’s finances emerged in June when the bankruptcy judge in charge of the case estimated that Accor could have suffered up to $ 22.2 million in damages when the owner of the hotel terminated Accor’s management contract.
However, the owner of the hotel and the Accor Management group reached an agreement that removed the main obstacle to a financial overhaul of the hotel.
Signia Hilton has agreed to make a payment of $ 15 million to bolster the hotel’s operations and finances. In addition, JPMorgan Chase is granting a loan of $ 25 million as an additional bulwark for the hotel.
The ongoing economic hardship triggered by the coronavirus played a significant role in the hotel closure and financial difficulties.
“The onset of the COVID-19 pandemic in the spring of 2020 created challenges, including lower occupancy rates, weaker financial performance, and borrower financing of approximately $ 18.6 million in deficits for maintain operations, “BrightSpire said in the SEC filing.
This ultimately led to the bankruptcy filing and lodging closure, according to the lender and the hotel owner.
Now, however, the group led by Hirbod seem confident in the hotel’s prospects.
“We have the right brand and the right team,” Hirbod said in August in comments provided to the news organization. “We are extremely confident in Hilton’s approach to hospitality, its understanding of this asset and its knowledge of the market. “