A San Jose office building seized through foreclosure in 2021 is in default on its loan — again — following two aborted efforts to develop housing on the building’s choice site near the city’s mega malls.
The office building is located at 826 N. Winchester Blvd. in San Jose. Since the start of the coronavirus outbreak nearly three years ago, the building has had a trio of owners and faced two foreclosure proceedings.
Numerous property transactions show that many investors still hunger for Silicon Valley office buildings despite current economic uncertainties.
Even so, the delinquent loans that have plagued the property are a reminder that more than a few commercial properties in the Bay Area are mired in financial woes.
At first glance, the office building would seem to be primed for success, given its location in San Jose.
It’s situated on Winchester Boulevard near the corner of Hedding Street. The three-story structure is a few blocks away from Stevens Creek Boulevard and the Westfield Valley Fair and Santana Row malls.
In the most recent foreclosure threat, Sacramento-based lender Socotra REIT said it was pushing to auction off the building, Santa Clara County property records show.
The borrower has failed to repay a December 2021 loan of $6.45 million, Socotra REIT states in documents related to the attempted foreclosure.
The current owner is Kochland LLC, an affiliate controlled by Kenneth Ryan Koch, a real estate executive based in the Folsom Lake-area town of El Dorado Hills. Kochland bought the office building in December 2021, according to the county records.
The current string of owners for the property originated in the spring of 2020, a review of county property records shows.
Kenneth Colbert, a Redondo Beach-based real estate executive, paid $8.25 million for the building in March 2020. That was the first month of coronavirus-linked business shutdowns, meant to combat the spread of the deadly bug.
At the time of the purchase, a Colbert-headed affiliate obtained a $6.1 million loan to finance the acquisition.
Eventually, the property’s mortgage became delinquent and the building was auctioned off through a foreclosure proceeding.
In June 2021, a group headed by Los Gatos-based Sridhar Capital paid $2.9 million to buy the office building during the auction.
In December 2021, the affiliate headed up by Kenneth Ryan Koch paid $10.75 million for the property. The Koch-led group also obtained the $6.45 million loan to finance the office building’s purchase.
Now, the current lender on the site is pushing forward with plans to auction the property before the end of this year.
Two of the recent owners of the property envisioned the 0.6-acre as a site where housing development could occur.
In 2021, Kenneth Coleman’s group proposed a mixed-use project with ground-floor retail or restaurant uses. Residences would sprout on the floors above, a summary of the planning documents shows.
In May 2022, Kenneth Ryan Koch’s group proposed a five-story mixed-use development that would have included housing. Koch couldn’t be reached for comment.
The two mixed-use projects were never built. The city planning records indicate that neither proposal received municipal approval.
The office center, known as Winchester Professional Building, stands empty and is bordered by a chain link fence. Graffiti mars multiple walls of the structure.
