SAN JOSE — An effort to revive a housing project at the long-shuttered Greyhound bus station in downtown San Jose has surfaced in a court filing that suggests the property’s owner hopes to ward off a foreclosure of its delinquent loan, according to Santa Clara County and federal bankruptcy court records.
China-based Z&L Properties, acting through an affiliate, had proposed the development of two residential towers that would have produced a combined 708 units at 60 South Almaden Blvd. and 70 South Almaden Blvd.
Z&L’s affiliate, Standard Properties, now envisions a housing development on a smaller scale, a document on file with a U.S. Bankruptcy Court shows.
“Shifting from high-rise condominiums to a more financially feasible apartment medium-rise development” is Z&L’s preferred approach to the housing project, Standard Properties stated in the court filing.
The affiliate has filed to reorganize its finances through a Chapter 11 bankruptcy proceeding.
The bankruptcy might help it delay a foreclosure proceeding whereby the property’s lender would auction off the property or take ownership to satisfy the loan delinquency. The lender has requested that the bankruptcy court terminate the case to allow the foreclosure to proceed, court papers show.
Standard Properties didn’t specify how many units might be built in the revamped proposal. The San Jose Planning Department hasn’t posted any new development proposals for the site.
In 2019, the Z&L affiliate paid $39.5 million for the site, documents on file with the Santa Clara County Recorder’s Office show.
“The loan secured by the property matured in 2019, leaving an outstanding balance of approximately $21.2 million,” the filing with the U.S. Bankruptcy Court states.
A Texas-based affiliate of a group whose principal executives include real estate developer Chris Jiashu Xu and business executive William Wang has obtained the loan for the property, Santa Clara County property records show.
Shanghai Commercial Bank Ltd. San Francisco Branch assigned the loan to the affiliate of the group headed up by Wang and Xu, according to documents filed on Sept. 4 with the Santa Clara County Recorder’s Office. The precise terms of the deal weren’t disclosed. In January 2024, A Xu-led group paid $135 million for the majority of Eastridge Center, a shopping mall in East San Jose.
Z&L Properties and its affiliates have produced a checkered business and real estate history in San Jose.
Over a period of several years, complaints have arisen about the blighted state of a historic church at 43 East St. James St. in downtown San Jose.
In June, a two-tower residential complex at 188 West St. James St. in San Jose was bought by Machine Investment Group for $181.9 million through a fast-track foreclosure proceeding that wrested ownership of the property from a Z&L affiliate.
After nearly all of its real estate empire in San Jose has dissolved through a combination of property sales at discounted prices or foreclosure proceedings, Z&L Properties appears to be mounting a fight to hang on to its Greyhound bus station site.
Standard Properties sketched out multiple proposals to accomplish a court-approved reorganization of the site’s finances, bankruptcy papers show:
— The debtor is seeking a joint venture arrangement to develop.
— “Adequate protection payments” would be made to the primary loan holder “by paying at least interest or one-half (or more) of the regular contractual monthly debt service” for the financing.
— Property taxes, insurance, maintenance, and security costs would be paid if the Z&L affiliate successfully completes a financial reorganization through the bankruptcy case. Affiliated “equity holders” would make these payments.
— “Once the joint venture is finalized, the debtor intends to restructure and pay off the senior secured debt in full, while preserving substantial equity,” the Z&L affiliate stated in the court filing.
A precise timeline for the filing of a plan of reorganization wasn’t disclosed in court papers.
The Greyhound terminal property may be worth considerably more than its loan amount, in the view of the Z&L Properties affiliate.
“The property has been valued between $29 million and $32 million, leaving significant equity,” according to the bankruptcy filing. “In addition, the debtor’s principals and affiliates have invested more than $60 million in acquisition and soft/hard development costs.”