SAN JOSE — A big San Jose office building has been seized by its lender through a foreclosure that serves up fresh evidence the Bay Area commercial real estate sector continues to wobble.
The office building is located near the corner of North First Street and Montague Expressway, one of San Jose’s busy intersections and is perched next to a light rail line.
East West Bank, the property’s lender, acted through an affiliate to seize ownership of the office building located at 3100 North First Street.
The building, which once was leased to Nio USA, a unit of a China-based maker of electric vehicles, totals 99,400 square feet. Nio vacated the building in October 2023, documents on file in San Francisco Superior Court show.
In 2018, East West Bank provided $25 million in financing to Santa Monica-based Vista Investment Group, the real estate firm that defaulted on the loan and eventually lost ownership of the building in the foreclosure proceeding.
Montague and First, an affiliate of East West Bank, paid $19 million for the empty building, according to documents filed on May 8 with the Santa Clara County Recorder’s Office.
The amount of unpaid debt at the time of the foreclosure, including principal, interest, penalties and late fees, was $25.8 million, the county documents show.
Nio USA began renting the building in August 2018. Nio’s lease ended in October 2023 and wasn’t renewed.
October 2023 was the same month the building owner allowed the property loan to topple into delinquency.
In August 2022, Nio USA advised Vista Investment Group that the electric vehicle maker intended to exit the property upon the conclusion of the lease and wouldn’t be renewing or extending its occupancy.
The foreclosure and seizure of the building provide fresh evidence that financial maladies continue to afflict the Bay Area office market in the wake of the coronavirus outbreak.