-
Signia by Hilton San Jose – Image Credit Hilton
San Jose’s Largest Hotel Loses Ownership in Foreclosure
Rachel Scheier of CoStar reports that the largest hotel in San Jose has been acquired by its lender, BrightSpire Capital, following a foreclosure sale. This event marks an end to the extended efforts made by the Bay Area-based owner to retain the property. The hospitality market in the region continues to struggle due to the impact of the COVID-19 pandemic.
Financial Struggles and Foreclosure Proceedings
The 541-room Signia by Hilton San Jose, previously owned by businessman Sam Hirbod and his Eagle Canyon Capital group, was valued at $80 million in the foreclosure proceedings. This valuation is significantly less than the hotel’s appraised value of around $217 million in late 2024. The San Jose Mercury News reported these details based on public records.
Hirbod’s group purchased the hotel in 2018 for $250 million and invested approximately $70 million in updates to the establishment, originally built in 1987. However, the financial challenges triggered by the pandemic forced the owners to declare bankruptcy in 2021, leading to the hotel’s closure for a year. It reopened in 2022.
Attempts at Financial Recovery
In 2023, Eagle Canyon sold part of the hotel to a Bay Area real estate firm. The firm planned to convert the 264-room southern tower into student housing for San Jose State University. Despite this, the loan for the northern tower defaulted in 2024, prompting the owners to file for bankruptcy again to restructure the hotel’s financial situation.
In February, Hirbod’s group took legal action in a Santa Clara County court to buy more time to raise enough funds to pay off the BrightSpire loan. Unfortunately, Superior Court Judge Shella Deen refused to stop the foreclosure proceedings earlier this month.
Broader Hospitality Market Woes
The foreclosure of Signia by Hilton San Jose is part of a larger trend for Bay Area hospitality properties, many of which have closed or defaulted on their loans. San Francisco, for instance, remains one of the least recovered hotel markets in the U.S, with several prominent hotels unable to pay off pre-pandemic loans. These include Hilton hotels in the Financial District, Union Square, and the Parc 55 San Francisco.
Despite these challenges, Hirbod asserts that business has been improving in recent months in San Jose, the largest city in the Bay Area and the urban center of Silicon Valley. According to CoStar, revenue per available room in the San Jose/Santa Cruz hospitality market increased by 7.5%, outpacing the national growth rate of 2.4%.
Discover more at CoStar.
