SAN JOSE >> A real estate auction to foreclose a delinquent $264 million loan for two housing towers in San Jose has been scheduled for as soon as early February, public records show.

Formerly known as Silvery Towers, the delinquent loan is related to construction financing for the buildings, which include about 600 total units at 188 W. St. James St. The loan was originally issued in 2019, documents on file with the Santa Clara County recorder’s office show.

FPP MB, an affiliate company Z&L Properties, owns the residential towers in the San Pedro Square neighborhood, county documents show.

Santa Clara County court records filed in 2024 stated that the owner of the towers was encountering financial struggles in its attempts to repay the real estate loan for the property. The developer stated in a court filing that the delinquent loan problem had been fixed.

However, in October 2024, the primary lender for the towers filed a notice of default against the property loan.

On Jan. 14, a subsidiary of Claros Mortgage Trust warned that it had scheduled an auction for the property in early February.

At the time of the mid-January filing, the unpaid debt was $212.5 million, including principal, interest, late fees, penalties and other costs — $7 million greater than the October 2024 estimate for the total unpaid debts.

The amount could increase by the time the foreclosure auction takes place.

In the October 2024 default filing, the lender stated that the “unpaid principal debt” for the double-tower housing complex was just under $169 million.

The loan default suggests the housing complex could become the latest in a growing string of development failures for the once-impressive real estate empire that Z&L Properties had fashioned in San Jose.

Among the struggling Z&L projects in San Jose:

• 188 W. St. James St. The complex is engulfed in legal battles along with the loan delinquency. For slightly over a year, FPP MB had been selling the condos in the western tower, but the transactions halted in July 2023 after the developer had sold about 100 units. In recent months, FPP offered the remaining 200 condos for rent.

• 43 E. St. James St. Z&L had agreed to protect and renovate an old church at this site next to St. James Park in downtown San Jose, but instead has neglected the historic building and allowed it to fall into disrepair. Z&L has also failed to develop housing towers on the site, which has become blighted.

• 60 and 70 S. Almaden Ave. Z&L had proposed a 708-unit housing complex on the site of a former Greyhound bus terminal in downtown San Jose.

A successful New York City real estate company bought the loan for the property in 2024 and has shoved the property into a loan default.

• West St. James Street and Terraine Street for years were the downtown San Jose site where Z&L had proposed a big housing development. Z&L never broke ground on this property and eventually sold it to a real estate alliance of global developer Westbank and Bay Area developers Gary Dillabough, Tony Arreola and Mark Lazzarini.

• In 2017, a Z&L affiliate paid $25 million for the vast 3,654-acre Richmond Ranch in southeast San Jose. In January 2024, the Z&L affiliate sold the ranchland for $16 million through an intricate plan to eventually enable the Santa Clara Valley Habitat Agency and the Santa Clara County Parks and Recreation Department to buy the property. Z&L never disclosed its game plan for owning the property.

The two high-rises at 188 W. St. James are the only projects that Z&L Properties’ affiliates have managed to complete.