SAN JOSE — A property where a boutique hotel was planned on a prime San Jose site near the area’s mega malls has flopped into loan delinquency and faces foreclosure — for the second time in slightly over a year.
Adeel Mahmood, a business executive, heads up an affiliate that owns the property at 2850 Stevens Creek Boulevard that now faces foreclosure of the delinquent loan and auction at a public sale, Santa Clara County records show.
That location, across the street from Westfield Valley Fair mall and just down the street from Santana Row and fairly near the operations of tech companies such as Apple, NetApp, Splunk and Roku, would have appeared to be an ideal site for a hotel — prior to the arrival of coronavirus-linked business shutdowns in March 2020.
San Jose officials approved the boutique hotel development before the coronavirus erupted and began to inflict wide-ranging damage to the economy in general and the leisure and hospitality sector in particular.
First Credit Bank, the site’s lender, filed a notice of default against the property’s owner, the Mahmood-led affiliate, according to documents filed with the County Recorder’s Office on Dec. 13.
The real estate affiliate defaulted on a $6.7 million loan that it obtained from First Credit Bank in 2019, the same loan that went into default in October 2021.
The property was facing a foreclosure auction in February 2022 and could have been sold off to the highest bidder. But prior to that auction, Mahood was able to rescue the property from default.
Mahmood then put the property up for sale, seeking to sell the site for $12.8 million in 2022. In 2021, Mahmood attempted to sell the parcel for $20.5 million.
Now, the latest default filing states that the Mahmood affiliate has a debt of $7.8 million that would have to be repaid in full or a foreclosure and auction could be the property’s fate.
The boutique hotel proposal envisioned an 11-story lodging with 175 rooms. Although the city had approved the project, the development never became viable enough to attract a construction loan.
A gasoline station currently occupies the site, which is near the interchange of Interstate 880 and Stevens Creek Boulevard.
The property first came under Mahmood’s control in 2015, when he bought it for $2.4 million, a review of county records shows. Mahmood is the principal executive of Villa Developers & Investment.
A few years after buying the site, Mahmood transferred the property’s ownership to the real estate affiliate that owns the parcel — for now.
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