Cupertino hotel near famed Apple office hub lurches into loan default
CUPERTINO — A South Bay hotel with a trendy design and a prime location near a famed Apple office hub has lurched into a loan default, a grim reminder of the weakness in the Bay Area’s feeble lodging sector.
Aloft Cupertino faces foreclosure due to a delinquent loan that finances the property, according to documents filed on Jan. 6 with the Santa Clara County Recorder’s Office.
The 123-room hotel is located at 10165 North De Anza Blvd. in a prime Cupertino location near several Apple tech hubs.
Aloft Cupertino is just a few blocks from Apple’s Infinity Loop campus. For decades, that complex served as the company’s headquarters before the tech titan established its head offices at the Apple Park spaceship complex.
The loan delinquency that looms over the Aloft Hotel is a fresh sign that economic maladies still afflict the Bay Area lodging and travel sectors even after the end of coronavirus-linked business shutdowns to combat the spread of the deadly bug.
“A lot of the hotels, such as Aloft Cupertino, that are focusing on commercial markets and business meeting are being severely negatively impacted by a loss of revenue,” said Alan Reay, president of Atlas Hospitality Group, which tracks the lodging market.
The four-story lodging is one of the Marriott International Aloft-branded hotels, which are known for a modern approach to their architecture.
Cantor Commercial Real Estate Lending issued the notice of default on the Aloft Cupertino loan, which was provided to the owner of the property in 2014, the public documents show.
The original loan amount was $34 million, according to the property records. At the time of the default, the unpaid debt, including principal, interest, fees and penalties, was $34.9 million.
If the loan isn’t repaid, the lender could foreclose on the financing instrument and put the property up for auction. The lender could also seize the property to satisfy the unpaid debt.
The loan was previously sent to special servicing arising associated with an attempt by the lender to provide some relief to the borrower, according to information posted by Trepp, which tracks and analyzes the commercial property and financing markets. The special servicing status occurred due to missed payments on the loan, Trepp stated.
The loan was modified in 2022, which provided breathing room to the hotel owner on the missed payments.
That didn’t work either, according to information supplied by Trepp. Trepp stated the hotel continued to struggle.
“Performance never rebounded,” Trepp stated in one of its information posts about the property.
The owner of the Aloft Cupertino is an affiliate controlled by Shashi Group, whose chief executive officer is Dipesh Gupta. Shashi Group owns five Bay Area hotels, all in the South Bay, according to the hotel company’s web site.
The Bay Area hotel market is in brutal shape, hounded by loan defaults and shaky financial structures.
Several hotels in San Francisco, including the historic Huntington Hotel atop world-famous Nob Hill, have been seized through foreclosures.
One hotel in downtown Oakland was bought at a price that shows a huge drop in value. Another Oakland hotel shut its doors without warning, causing significant job losses.
“Revenue has declined and interest rates are going up,” Reay said. “Then you also have a severe decline in value as a result. With a lot of these loans, the hotel owners are just saying they are out of there.”