Los Gatos hotel seized through swift foreclosure as market wobbles

"Denver-based KSL Capital Partners, whose units include Peregrine Hospitality, took ownership of the hotel through a deed in lieu of foreclosure, which is a speedy process to enable a lender to take ownership of the property. The unpaid debt was $30 million at the time of the foreclosure, according to documents filed on March 5 with the Santa Clara County Recorder's Office."

"In 2019, the firm paid $43.5 million for the Toll House Hotel, county property documents show. The foreclosure deed stated that KSL Capital's affiliate paid no more than the $30 million in unpaid debt to obtain it. This suggests that the hotel's value fell by at least 31% since the prior purchase."

"Nearly every hotel market in the Bay Area, with the exception of the North Bay Wine Country and the getaway resorts along Monterey Bay and in Big Sur, is struggling. The largest hotels in both San Jose and Oakland, as well as big hotels in San Francisco, have been foreclosed by their lenders."

The Toll House Hotel in Los Gatos was acquired by Denver-based KSL Capital Partners through foreclosure, with the property's value dropping from $43.5 million in 2019 to $30 million in unpaid debt, representing a 31% decline. This transaction exemplifies the Bay Area's struggling hospitality sector, where nearly every hotel market except North Bay Wine Country and Monterey Bay resorts faces significant challenges. Major hotels in San Jose, Oakland, and San Francisco have experienced foreclosures, causing widespread value deterioration. The declining property values threaten local government revenue streams from property taxes, affecting cities, counties, regional agencies, and school districts. However, these depressed values also create investment opportunities for new owners entering the market.

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