Hotel Valencia Developer Pays off Construction Loan

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SAN JOSE, CA-The owner of Hotel Valencia here has paid off its construction loan with a $36.5-million securitized loan. The 10-year loan has a fixed rate in the low 6% range and is interest-only for the first two years. The loan-to-value ratio is under 70%.

Located five miles west of Downtown at the Santana Row mixed-use development, the luxury hotel has 211 rooms and 16 suites. Amenities include an outdoor heated pool, sundeck and spa services.

The hotel sits atop street-level retail space at Santana Row, which has shopping, dining, entertainment and residential components. The hotel is subject to a 99-year ground lease with Federal Realty Investment Trust, the owner of Santana Row.

The owner of the hotel is listed as Santana Row Hotel Partners LP, which is related to Valencia Group, a Houston-based organization actively involved in the development and operation of full-service, luxury hotels. The hotel is managed by Hotel Valencia Corp., which also is an affiliate of Valencia Group.

The financing was provided by Wachovia Securities and arranged by Holliday Fenoglio Fowler managing director Jeff Knowles. Knowles tells GlobeSt.com that the hotel is one of the newest hotels in the San Jose market and is the market leader in terms of occupancy and room rates.