News – USA – Fairmont Hotel in downtown San Jose files for bankruptcy

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SAN JOSE – The Fairmont Hotel, a landmark in downtown San Jose, filed for bankruptcy and closed its doors on Friday – but says it will resume and resume operations within two to three months

The owners of the iconic 805 room hotel said they closed the Fairmont while it was trying to find a management partner and extend its existing mortgage debt

The Fairmont in San Jose is hardly alone with financial hardship amid the economic fallout from the coronavirus that has driven conventions and travelers from hotels

“We know that by taking this difficult step, we will return to a more vibrant hotel that benefits everyone in San Jose, including the vitality of downtown, nearby businesses, and Silicon Valley conventions in a post-COVID- 19 world, ”said Sam Singer, a representative of the Fairmont Hotel

A growing number of hotels around the world – and in the Bay Area – have gone bankrupt or have had problems with funding

“Unfortunately, this is a local expression of the devastation the hospitality industry has suffered worldwide,” said Sam Liccardo, Mayor of San Jose, in an interview with the news organization

Throughout 2020, only 14 default notices were submitted for a defaulted loan against California hotels This is based on research statistics provided by Alan Reay, president of Atlas Hospitality Group, which tracks the news market nationwide, to this news organization

In January 2021 alone, at least 20 notices of default were filed against hotels in California, Reay

said

“The hotels that have suffered the most are in business centers and convention centers,” said Reay. “This is definitely the situation with the Fairmont”

The subsidiary that owns the Fairmont San Jose hotel has listed debts that were between $ 100 million and $ 500 million, according to a report made by the U. Bankruptcy court

Eagle Canyon Capital of San Ramon, of which Sam Hirbod is president, is the main owner and operator of the hotel, according to court records

“The hospitality industry has been completely crushed by the pandemic,” said Scott Knies, executive director of the San Jose Downtown Association

Among the top creditors who have unsecured claims against the bankrupt hotel: the city of San Jose, which owes $ 106 million, the court records show

“We’ll be back in 60 to 90 days with improved finances and a new hotel management team,” said Singer

The hotel was moving guests at the San Jose Fairmont to other properties nearby

However, not all guest departures went smoothly. Kevin Simmonds, a San Francisco resident and writer, had planned a two night stay and the Fairmont San Jose got off for about three hours to soak up the fine weather and finishing touches to a book. He returned to find a confusing situation in the accommodation

“The hotel manager asked if I was staying at the hotel, I said yes and she told me I had to go,” Simmonds said. “I asked why and she said,” I can’t tell you “I said,” What do you mean you can’t tell me this is insane. “She told me that the Fairmont directed all guests to go to the nearby Hilton”

Simmonds asked the hotel manager if the Fairmont San Jose would compensate guests for the lost night. “She said,” No, we will not compensate you, “said Simmonds

“I’m absolutely amazed,” said Simmonds “I knew the front desk couldn’t do anything, but at least they could have treated me with dignity and respect”

In 2018, a Sam Hirbod-owned subsidiary paid $ 2235 million for the hotel at the time of purchase, the purchasing group received a $ 1735 million loan from NS Income Opportunity REIT, County Property Records show
In March 2020, this loan was made to a new lender, CLNC Mortgage Sub-REIT, controlled by Colony Credit Real Estate, a company that provides funding and debt to a range of commercial properties

The Fairmont lost at least $ 18 million in 2020 and is expected to lose at least another $ 20 million in 2021, according to hotel owners

“We look forward to the Fairmont opening its doors in time for our downtown revitalization in the coming months,” said Liccardo

Fairmont San Jose, Fairmont Hotels and Resorts, Bankruptcy

News – United States – Fairmont Hotel in downtown San Jose files for bankruptcy
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Source: https://www.mercurynews.com/2021/03/05/fairmont-hotel-downtown-san-jose-bankruptcy-covid-real-estate/