Foreclosure looms for empty San Jose office and biotech building
Post-COVID woes haunt Bay Area office market
SAN JOSE, Calif. — A large San Jose office and research building is facing foreclosure and seizure by its lender, a new reminder of the Bay Area commercial real estate market’s widening post-coronavirus ailments.
Khloris Biosciences had signed a lease to take over the entire building at 5729 Fontanoso Way in South San Jose at one point. However, it was unclear whether the company ever occupied the building.
According to documents filed with the Santa Clara County Recorder’s Office on Oct. 23, the property’s lender, The Evergreen Advantage, has scheduled a public auction for the office building as part of its efforts to foreclose the delinquent loan.
According to county records, the delinquent loan, which was issued in July 2022, is worth $18.4 million.
According to real estate records, the amount owed by the borrower and property owner has risen to $24.5 million due to back-interest, late-payment penalties, and unspecified fees.
Atlas Capital Investments, based in Saratoga, paid $27.4 million for the 78,200-square-foot building on a 4.7-acre site in May 2022.
Atlas Capital obtained the $18.4 million loan from Evergreen Advantage at the time of the transaction to finance the purchase.
According to property documents, the foreclosure and auction are scheduled for November 15.
Around the same time, Khloris Biosciences signed a lease for the entire building, with the slogan “a world without cancer” prominently displayed on its website. Khloris Biosciences was founded by Joseph Wu, director of the Stanford Cardiovascular Institute, and Lynne Bui, a South Bay oncologist.
According to the Crunchbase website, Khloris Biosciences also raised $5 million in a venture funding round in 2018. No subsequent funding rounds for the biotech firm were mentioned by Khloris or Crunchbase.
Following the coronavirus outbreak, the Bay Area office market has suffered greatly, with many people continuing to work remotely. Tech firms’ appetite for office space has significantly decreased.
