Big East Bay hotel is taken back by lender due to delinquent loan​on April 7, 2025 at 12:30 pm

A big hotel in downtown Oakland has been seized by the property’s lender because of a delinquent loan.   

 

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OAKLAND — A big hotel in downtown Oakland has been seized by the property’s lender because of a delinquent loan, a deal that offers fresh evidence of the feeble state of hotels in the Bay Area.

The hotel that was taken back due to its loan woes is a dual-brand Marriott hotel at 1431 Jefferson Street in downtown Oakland, documents filed on March 28 with the Alameda County Recorder’s Office show.

Cook Children’s Health Care Services is the new owner of the 276-room hotel following a deed in lieu of foreclosure, which is a streamlined version of the conventional process for a lender to seize a property with a delinquent loan.

Beverly Hills-based real estate firm Hawkins Way Capital, acting through an affiliate, paid $30.8 million to buy the property where the hotel would be built.

Hawkins Way then developed the hotel, financed by a $112 million loan that a unit of investment titan Goldman Sachs Group provided in 2019.

In 2023, the Goldman Sachs subsidiary transferred the loan to Texas-based Cook Children’s Health Care System, a nonprofit whose operations include a children’s hospital in Fort Worth.

At the time of the deed in lieu of foreclosure transaction, the unpaid debt on the loan was $117.1 million, including principal, interest, late fees and penalties, according to the Alameda County property records.

The 18-story hotel opened in 2022 and is operated as a hotel with dual Marriott brands, a Residence Inn and an AC Hotel. The Residence Inn offers 143 rooms and the AC Hotel provides 133 rooms.

The Hawkins Way Capital firm believed that the two brands would give the hotel access to different types of customers.

A Residence Inn typically caters to guests who plan longer stays. An AC Hotel usually caters to guests seeking shorter stays.

The hotel might wind up on the sales block soon.

Why? Owning hotels is not considered to be a core part of the investment portfolio of a nonprofit organization whose primary mission is children’s healthcare services.

The foreclosure comes at a time when the majority of Bay Area hotels remain well below the lofty levels of success they had before the onset of lockdowns to combat the spread of COVID-19.

These trends are visible in key benchmarks that experts use to assess the hotel market, according to information provided by CoStar, which tracks the commercial real estate industry.

Here is how several key markets fared in 2024 compared with 2023 in terms of revenue per available room, according to reports provided to this news organization by CoStar, a company that tracks the commercial real estate industry:

• Oakland: a RevPar of $88.55, down 5.2%

• Downtown San Jose: $139.40, up 27.9%

• San Jose: $116.23, up 9%

• San Francisco: $139.34, down 4.9%

• Los Angeles: $139.68, down 1.7%

• Anaheim: $149.15, down 1.5%

• San Diego: $157.90, down 4.9%

• Sacramento: $101, up 2.2%

• Monterey County: $179.05, up 1.5%

• Santa Barbara County: $168.86, up 1.5%

• San Luis Obispo County: $190.32, down 0.3%

The revenue per available room, or RevPar, metric isn’t the only sign of difficulties in the Oakland hotel market.

The Hilton Oakland Airport Hotel closed its doors in August 2024, a shutdown that erased 152 jobs

In October 2024, the Courtyard Oakland Downtown, a 162-room hotel in downtown Oakland, was bought for $10.6 million — a jaw-dropping 76% decline from the hotel’s prior value.

In February 2025, the 500-room Oakland Marriott City Center in downtown Oakland went into default on a $100 million loan, raising the specter of foreclosure for the East Bay’s largest hotel.