SAN JOSE – A big office constructing in north San Jose could avoid foreclosure if a federal judge approves a bankruptcy plan being considered to reorganize the vacant property's struggling funds.
Despite attempts at a financial rescue, real estate values for office buildings within the Bay Area proceed to say no, in keeping with court documents filed on this bankruptcy case.
Default and bankruptcy are a sign that economic conditions for Bay Area office buildings remain shaky at best within the years following the coronavirus outbreak.
The office constructing is situated at 10 West Tasman Drive in northern San Jose and has a complete area of 105,000 square meters.
In December 2023, the office constructing went into default as a result of delinquencies on a $29 million loan that Copia Lending made to the constructing's owner in 2021, in keeping with Santa Clara County land records.
The office constructing is owned by San Jose-based Heritage 10 West Tasman LLC. Executives who own or manage the constructing include Ji Wan Jung, Sung Hong, Samyang Development, Doo Pyo Lee, Daehyun Kang, Ji Young Kim and David Jankowitz, in keeping with U.S. Bankruptcy Court filings.
Copia Lending had planned to auction the office constructing in April 2024 as a part of a foreclosure process. But that very same month, the constructing owner fended off the foreclosure – in the interim – by filing for bankruptcy.
The constructing's owners hope to stabilize the property's financing with funds from Legalist Inc., an organization that invests in a variety of assets, including distressed or bankrupt properties. Legalist's clients include major investors corresponding to foundations, hospitals, insurance firms and wealthy families.
The constructing owner plans to borrow $24.8 million from Legalist to repay Copia and diverse other creditors.
“This (reorganization) plan provides for a refinancing of the property,” the bankrupt owner explained in a July 2 court document.
According to court documents, the worth of the constructing has apparently dropped sharply lately.
Records filed with the Santa Clara County Assessor's Office show that the office constructing's value was $51.3 million in January 2024.
This implies that the estimated market value is about 58% below the assessed value – lower than half the worth set by the county authorities.
“The debtor (developer) was unable to rent out the property in a timely manner,” the court file states.
The combination of worldwide and native economic disasters destroyed the financial foundation of the office constructing.
“The pandemic and the prolonged, stricter lockdowns in California, as well as the time it took for companies to limit remote work and return to a traditional work environment,” have weakened tenant interest within the constructing, the owners said in court documents.
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