SAN JOSE — A big hotel in San Jose has received multiple financial boosts from its lender this year, hopeful indicators that the lodging facility has begun to recover from coronavirus-linked economic woes.
The Signia by Hilton San Jose hotel in downtown San Jose has landed two increases during 2023 in the principal amount of its real estate loan, documents on file at the Santa Clara County Recorder’s Office show.
The financing boosts that the lender, an affiliate of Brightspire Capital, provided to the Signia by Hilton offer strong signals that the financier is confident in the prospects for the hotel at 170 South Market Street in San Jose, in the view of Sam Hirbod, principal owner of the hotel property.
“Our lender recognized the great amount of equity that we have and continue to build in the Signia,” Hirbod said in an interview with this news organization. “This is why they increased the loan sizes a couple of times.”
The upswing in the loan amount for the hotel offers a hopeful counterpoint to the financial struggles of the hotel that began in 2020 due to the government-ordered business shutdowns to combat the spread of the coronavirus.
Even after the shutdowns began to ease, the hotel, previously known as the Fairmont San Jose, still struggled and tumbled into bankruptcy and closed its doors in March 2021.
The 805-room hotel reorganized its finances through the bankruptcy proceeding and reopened in April 2022, rebranding as a Signia by Hilton hotel.
The first financing package from a Brightspire Capital affiliate was provided to the hotel property in November 2021 for an amount of just under $185 million, according to a loan document filed with the county.
Then in February 2023, Brightspire amended the original loan and increased the financing package to slightly under $192 million, a 3.8% increase.
In June 2023, the loan was modified for a second time, reaching a new amount of $193.4 million, which was 4.5% higher than the original loan amount.
“When we restructured the financing and rebranded, our lender and the hotel made some assumptions about the timing of the return of business after the shutdowns,” Hirbod said. “But nobody had a crystal ball in 2021 as to when the business world would come back after COVID.”
With business sluggish to revive, Hirbod’s ownership group financed the shortfalls in the hotel’s budget and built up the owner equity in the property.
“We spent close to $60 million to renovate the hotel,” Hirbod said.
The revamp included upgrades to the rooms, lounge, lobby, restaurants, bar, swimming pool area and other amenities at the hotel.
At present, all of the guests in the hotel are staying in the northern tower, which totals 541 rooms.
The southern tower totals 264 rooms and is being marketed for sale. A sale of the south tower could further brighten the hotel’s financial picture.
“The lender increased the loan size a couple of times to assist us with any reserves or shortfalls until get get to a stable point in the timeline,” Hirbod said. “We continue to work with our lender.”
The Signia hotel is deemed to be a crucial part of the economic mosaic in a downtown San Jose area that is battling to regain its footing in the wake of the coronavirus outbreak.
Hirbod said that the hotel is gaining occupancy levels on a steady basis. He didn’t give current occupancy figures but said the levels are improving every month.
“We still have a very positive attitude about this hotel,” Hirbod said.