Bank Seeks Foreclosure on 29-Acre San Jose Housing Site
Submitted May 20, 2010, 6:20 PM
Los Angeles-based Hanmi Bank has filed a notice of default on a more than $30 million loan secured by 29 acres of entitled and partially developed residential land owned by Santa Clara-based Roem Development Corp.
Hanmi filed the notice May 17 stating it was owed $4.7 million, according to The Blue Sheet. The bank is a subsidiary of Hanmi Financial Corp., a publicly traded holding company.
Calls to the bank and Roem were not returned.
The property in question is the Montecito Vista Park community at Monterey Road and Goble Lane in South Central San Jose. The master-planned development was originally slated to include a two-acre park, 18,000 square feet of retail space and nearly 800 town homes, condos and apartments, according to published reports and marketing material remaining at the site. Fifty-three single-family town homes have been developed and sold, according to a Roem Web site.
Hanmi Bank, which reported $3 billion in assets at the close of its first quarter, specializes in commercial, Small Business Administration and trade lending. It focuses on the “multi-ethnic communities of California,” according to bank statements. The bank has branches at 1469 Webster St. in San Francisco and at 2765 El Camino Real in Santa Clara.
The bank reported a $49.5 million loss in the first quarter, up from a $17.2 million loss in the same quarter a year ago. The first-quarter loss was driven by a $58 million set-aside in provisions for loan losses. The bank is under orders by federal and state regulators to raise $100 million in new investment capital by July 31.
Home builders, in particular publicly traded home builders, have been active and aggressive buyers of certain types of residential properties in the valley since last year, said Chris Twardus, a commercial broker with Colliers International who specializes in residential land sales. By and large, the most attractive properties, those in good school districts with complete entitlements and finished lots, have been sold or are under contract with multiple bids, he said.
But builders are not interested in everything, he said. They want single-family detached subdivisions and town-home properties. They do not want condominium or high-density multifamily sites where existing entitlements call for podium development. On those properties, which require parking to be built beneath a building and don’t allow for phasing, interest is lukewarm because construction is expensive and lenders are gun-shy.
A 4.7-acre site in Los Altos zoned to allow for 80 homes and some support retail is under contract for $23 million, he said. Based on a $20 million purchase price for the residential portion of the property, Twardus estimates Lennar Homes is spending about $250,000 a lot, which implies sales prices of $1 million for each home.
Meanwhile, at the so-called Corn Palace site in Sunnyvale (named for a vegetable stand that has long-occupied the farmland), Toll Bros. is under contract to pay $24 million for 10 acres entitled for 51 single-family, detached homes. That implies an expenditure of $450,000 a lot and an eventual sales price of $1.2 million per home, he said.
Roem itself tried to sell the property about a year ago, Twardus said, and it is his understanding that a portion of it remains under contract.
