A lender has seized ownership of a Milpitas townhouse development site through the foreclosure of a loan for the mixed-use project.
The property that suffered a foreclosure is the site where a project of townhomes and retail had been proposed at 808 S. Main St. in Milpitas, Santa Clara County documents show.
The mixed-use development was slated to include 27 townhomes and 1,800 square feet of ground-floor commercial space at a prominent Milpitas site.
Greenlake Real Estate Fund, which in 2019 provided $17.85 million in financing for the property, wound up owning the site as a result of the foreclosure proceeding, public records filed on Nov, 17 show.
A growing number of Bay Area properties, including some big hotels, are being haunted by the specters of mortgage delinquencies and foreclosure amid coronavirus-linked economic uncertainties and business shutdowns.
The project’s developer, Eighty-Eight Homes, filed for bankruptcy in August 2020, an attempt to keep ownership of the property and ward off the foreclosure attempt, court records show.
Eighty-Eight Homes, which is headed up by San Jose resident Mary Ly, was hoping the bankruptcy would buy enough time to enable the project to be completed and for the developer to generate cash through the sale of the townhomes, according to bankruptcy court documents.
“The debtor pre-sold several condominium units and if the property is foreclosed, the debtor will not be able to provide the promised units,” developer Eighty-Eight Homes told the bankruptcy court in a document filed on Aug. 16.
Eighty-Eight Homes also told the court that the construction of the project would pave the way for the developer to pay off its debts.
“The property is valuable,” Eighty-Eight Homes stated in a court filing. “If the debtor is able to complete the project, all of the creditors can be paid in full.”
Ultimately, the bankruptcy court dismissed the case after the developer failed to meet some court-ordered deadlines.
The termination of the bankruptcy case in September cleared the way for the foreclosure proceeding to reach its conclusion through a trustee’s sale of the property to the lender.
At the time of the foreclosure, the unpaid debt on the original loan was $16.3 million. The lender, GreenLake Real Estate Fund, took back the development site in a foreclosure that placed a value on the property of $11.75 million.
The project’s immediate fate isn’t clear because of the nature of the new owner’s business.
GreenLake Real Estate Fund and its parent company, South Pasadena-based GreenLake Asset Management, have an expertise in lending and real estate investments rather than development, the GreenLake website shows.
What is clear, however, is Milpitas city officials were hoping the Eighty-Eight Homes project at South Main Street and Curtis Avenue would provide some key benefits for the city.
“The project is a mixed-use development which will provide commercial spaces along with residential development and increase job opportunities within the compact area of Main Street,” Milpitas planners stated in a staff report.
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