CUPERTINO >> A South Bay hotel with a trendy design and a prime location near a famed Apple office hub has lurched into a loan default.

Aloft Cupertino faces foreclosure due to a delinquent loan that finances the property, according to documents filed on Jan. 6 with the Santa Clara County Recorder’s Office.

The 123-room Aloft Cupertino is located at 10165 North De Anza Blvd., just a few blocks from Apple’s Infinite Loop campus. For decades, the complex served as the company’s headquarters before it established its head offices at the Apple Park spaceship complex.

The loan delinquency that looms over the hotel is another sign that economic conditions may still be afflictling Bay Area lodging and travel sectors.“A lot of the hotels, such as Aloft Cupertino, that are focusing on commercial markets and business meetings are being severely negatively impacted by a loss of revenue,” said Alan Reay, president of Atlas Hospitality Group, which tracks the lodging market.

Cantor Commercial Real Estate Lending issued the notice of default on the Aloft Cupertino loan, which was provided to the owner of the property in 2014, public documents show.

The original loan amount was $34 million, according to property records. At the time of the default, the unpaid debt, including principal, interest, fees and penalties, was $34.9 million.

If the loan isn’t repaid, the lender could foreclose on the financing instrument and put the property up for auction. The lender could also seize the property to satisfy the unpaid debt.

The loan was previously placed on a troubled financing watch list, according to information posted by Trepp, which tracks and analyzes commercial property and financing markets. The loan landed on the watch list after missed payments on the hotel mortgage, Trepp stated.

The Aloft Cupertino loan was modified in 2022, which provided breathing room to the hotel owner on the missed payments.

That didn’t work either, according to information supplied by Trepp.

“Performance never rebounded,” Trepp stated about the property.

In October, an appraisal placed the hotel’s value at $39.7 million, according to a Trepp report. That was down a hefty 27.1% from a previous appraised value of $54.1 million.

The owner of Aloft Cupertino is an affiliate controlled by Shashi Group, whose CEO is Dipesh Gupta. Shashi Group owns five Bay Area hotels, all in the South Bay, according to the hotel company’s website.

The hotel’s owner engaged in multiple rounds of negotiations regarding the loan, but the discussions ultimately proved unfruitful, according to Trepp. This news organization attempted to reach the hotel ownership group by email to request a comment regarding the situation.

“With a lot of these loans, the owners are just walking away from the hotel and saying they are out of there,” Reay said.

The Bay Area hotel market is in brutal shape, hounded by loan defaults and shaky financial structures.

Several hotels in San Francisco, including the historic Huntington Hotel atop world-famous Nob Hill, have been seized through foreclosures.

One hotel in downtown Oakland was bought at a price that shows a huge drop in value. Another Oakland hotel shut its doors without warning, causing significant job losses.

“Revenue has declined and interest rates are going up,” Reay said. “Then you also have a severe decline in value as a result.”