SAN JOSE — A big San Jose office constructing has been seized by its lender in foreclosure, providing recent evidence that the Bay Area's industrial real estate sector continues to falter.
The office constructing is situated near the corner of North First Street and Montague Expressway, certainly one of San Jose's busiest intersections, and is adjoining to a light-weight rail line.
The constructing, which was once leased to Nio USA, a unit of a China-based electric vehicle maker, has a complete area of 99,400 square meters. Nio vacated the constructing in October 2023, in response to documents filed with San Francisco Superior Court.
In 2018, East West Bank provided $25 million in financing to Santa Monica-based Vista Investment Group, the actual estate company that defaulted on the loan and ultimately lost ownership of the constructing in foreclosure proceedings.
Montague and First, a subsidiary of East West Bank, paid $19 million for the vacant constructing, in response to documents filed May 8 with the Santa Clara County Recorder's Office.
The amount of unpaid debt on the time of foreclosure, including principal, interest, penalties and late fees, was $25.8 million, county records show.
Nio USA began leasing the constructing in August 2018. Nio's lease resulted in October 2023 and was not renewed.
October 2023 was the identical month that the constructing owner allowed the property loan to enter default.
In August 2022, Nio USA told Vista Investment Group that the electrical vehicle maker intended to vacate the property upon completion of the lease and never extend or renew occupancy.
The constructing's foreclosure and seizure provide recent evidence that financial woes proceed to plague the Bay Area's office market within the wake of the coronavirus outbreak.
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