San Jose apartments with failed loan have suffered plunge in value

SAN JOSE — A San Jose apartment complex that is facing foreclosure over a failed loan has suffered a big decline in value and faces a murky future, court papers show.

The Neo on First residential hub is in default on a $21 million loan, and its owner has launched fights in two different court venues to delay or halt the foreclosure and a loss of the property.

The owner of the 50-unit apartment complex, which is at 955-975 South First St. near downtown San Jose, has filed for bankruptcy and also has launched a lawsuit against the property’s lender, according to court filings.

Appraisals that were filed as part of the Santa Clara County Superior Court lawsuit show that the apartment hub’s value has plunged in recent years.

A Cushman & Wakefield appraisal in 2022 determined that the property had a value of $29 million.

In 2025, however, an appraisal conducted by Integra Realty Resources found that the apartment complex was valued at $22.9 million. That was barely above the loan amount and a 21% drop from the prior appraisal three years earlier.

The apartment complex’s principal owner is a Cupertino-based business entity. The chief executive officer of the entity is listed as Xuhan Yu.

The San Jose residential hub’s loan default is the latest example of widening problems in the Bay Area housing market.

The Neo complex is a few blocks from another San Jose apartment property that flopped into financial woes.

On Jan. 28, The Fay, a 23-story, 336-unit apartment tower at the corner of South First Street and East Reed Street, was foreclosed due to the failure of a $182.5 million construction loan.

The lender for The Fay valued the residential hub at only $110 million at the time of the foreclosure.

On Jan. 22, the University Park apartment complex in Berkeley near the UC campus was foreclosed at a value of $25 million for the 97-unit residential hub.

As for The Neo apartments in San Jose, the property’s lender, CTBC Bank, hopes to foreclose on the property sometime during the next few weeks or months, depending on circumstances in the bankruptcy and Santa Clara County court cases.