SAN JOSE — A possible deal for the purchase of a long-shuttered hotel in San Jose is coming into view even as the historic lodging tower is preparing to open its doors again after being closed for months.
Hotel De Anza, a 10-story hotel built in 1931, is headed for a potential purchase at a price that could be well below its value before the coronavirus outbreak, according to sources familiar with the purchase discussions.
Before the coronavirus unleashed wide-ranging economic woes and triggered government-imposed business shutdowns, one or more prospective bidders had floated a price in the vicinity of $30 million, according to the sources.
Now, the purchase offer is more in the range of $10 million to $12 million, according to the sources, who requested anonymity because they were not authorized to speak on behalf of the principals in the negotiations.
Newmark, a commercial real estate firm, has been marketing Hotel De Anza, according to a property brochure Newmark is circulating.
“The iconic art deco property is currently positioned as the only boutique lifestyle asset in the market and provides a rare opportunity to acquire an operationally flexible, historic asset,” Newmark’s Lodging Capital Markets unit stated in the sales brochure.
The 100-room hotel is one of San Jose’s few Zig Zag Moderne, or Art Deco, buildings. Hotel De Anza was built in 1931 and was added to the National Register of Historic Places in 1982. It was renovated in 2015.
The potential purchase deal has yet to be completed and there is no assurance that a purchase of the hotel will be completed.
What is certain is that a price in the approximate vicinity of $11 million would be considerably less than the hotel’s prior purchase amount as well as its current assessed value.
In 2014, an affiliate of Lowe Enterprises Investment paid $20.4 million for Hotel De Anza.
In January 2024, the value of the hotel property was $25.2 million, according to documents posted with the Santa Clara County Recorder’s Office.
This means the purchase price could be 56% below the hotel’s assessed value. The $11 million price, if the deal is completed on roughly those financial terms, would also be 63% below what investors were willing to pay before the coronavirus.
The transaction, if completed in the $11 million range, could nudge Bay Area hotel values lower.
The lodging and travel markets in the Bay Area and worldwide have struggled to regain the health they enjoyed before the economic dislocations ushered in by the coronavirus.
The De Anza hotel operates under the Destination by Hyatt brand, which connects the hotel to the iconic Hyatt chain’s lodging and reservations network.
Separately, Hotel De Anza, which abruptly shut its doors in May, could be headed to a reopening after months of being closed to guests and the public. The hotel is located at 223 West Santa Clara Street in San Jose.
“Hotel De Anza has suspended normal hotel operations due to the effects of unexpected maintenance and is expected to resume normal hotel operations on October 1st, 2024,” Hyatt stated on a website for Hotel De Anza.
Previously, when the hotel closed its doors in May, hotel officials had hoped to resume operations in June.
A hotel staffer stated in May that the closure was linked to water damage in the hotel but didn’t elaborate.
An October opening means Hotel De Anza missed the entire summer travel season for 2024.
“The Hotel De Anza has been diligently maintained” since it was last renovated in 1990 and “provides a perfect combination of history, charm, elegance, and style,” Newmark stated in the marketing package.