SAN JOSE — A possible deal to purchase a long-closed San Jose hotel is coming into view as the historic hotel tower prepares to reopen its doors after months of closure.
The Hotel De Anza, a 10-story hotel built in 1931, is facing a possible purchase at a price that could be well below its pre-coronavirus value, according to sources familiar with the purchase talks.
Before the coronavirus triggered widespread economic problems and resulted in government-ordered business closures, one or more potential bidders had suggested a price of around $30 million, according to the sources.
Now the purchase offer is more likely to be in the range of $10 to $12 million, according to the sources, who requested anonymity because they were not authorized to speak on behalf of the clients in the negotiations.
Newmark, a commercial real estate company, has marketed the Hotel De Anza, according to a real estate brochure distributed by Newmark.
“The iconic Art Deco property is currently positioned as the only boutique lifestyle property on the market and offers a rare opportunity to acquire an operationally flexible, historic property,” Newmark’s Lodging Capital Markets division said in the sales brochure.
The 100-room hotel is one of the few Zig Zag Moderne or Art Deco buildings in San Jose. Hotel De Anza was built in 1931 and added to the National Register of Historic Places in 1982. It was renovated in 2015.
The potential purchase agreement has yet to be finalized and there is no guarantee that the purchase of the hotel will be completed.
What is certain, however, is that a price in the region of $11 million would be significantly lower than the previous purchase price and the current estimated value of the hotel.
In 2014, a Lowe Enterprises Investment affiliate paid $20.4 million for the Hotel De Anza.
As of January 2024, the hotel property was valued at $25.2 million, according to records filed with the Santa Clara County Registry of Deeds.
This means the purchase price could be 56% below the hotel’s appraised value. The $11 million price tag, if the deal closes on roughly those financial terms, would also be 63% below what investors were willing to pay before the coronavirus.
If the transaction closes in the $11 million range, it could lead to a decline in hotel prices in the Bay Area.
Lodging and travel markets in the Bay Area and around the world are struggling to regain the stability they enjoyed before the economic disruption caused by the coronavirus.
The De Anza Hotel is operated under the Destination by Hyatt brand, which connects the hotel to the accommodation and reservation network of the legendary Hyatt chain.
Separately, Hotel De Anza, which abruptly closed its doors in May, may be on the verge of reopening after months of being closed to guests and the public. The hotel is located at 223 West Santa Clara Street in San Jose.
“The Hotel De Anza has suspended normal hotel operations due to the impact of unexpected maintenance and is expected to resume normal hotel operations on October 1, 2024,” Hyatt said on a Hotel De Anza website.
When the hotel closed its doors in May, those in charge had hoped to be able to resume operations in June.
A hotel employee said in May that the closure was related to water damage at the hotel, but did not elaborate.
An October opening means the Hotel De Anza will miss the entire 2024 summer travel season.
“The Hotel De Anza has been meticulously maintained since its last renovation in 1990” and “offers a perfect combination of history, charm, elegance and style,” Newmark explained in its marketing package.
