SAN JOSE — Signia by Hilton San Jose, the South Bay city’s largest hotel, was seized by its lender in a foreclosure that priced the tower at a fraction of its value, a sign that lodging woes still haunt the city’s downtown.

BrightSpire Capital, acting through an affiliate, took ownership in a foreclosure that placed an $80 million value on the 541-room hotel — 41% less than the $134 million loan that the affiliate provided.

According to an appraisal by HVS Consulting & Valuation, the hotel was worth $217.4 million in November 2024.

The foreclosure may end a long-running fight by the hotel’s prior owner, a group headed up by Bay Area business executive Sam Hirbod, to keep the hotel from falling to its lender.

“I lost 30 years of my life equity in there,” Hirbod said in an interview with this news organization. “All $180 million that we put into the hotel that I had earned over 30 years of hard work is gone.”

The twisting legal, financial and economic troubles surrounding Signia by Hilton San Jose began in March 2021 when the Hirbod-led ownership group filed for bankruptcy and closed the hotel for a year.

In November 2023, the hotel’s owners gained a financial boost when they sold the 264-room southern tower for $73 million to a Bay Area real estate firm that promptly began to convert the highrise into San Jose State University student housing.

The loan for the northern tower went into default in 2024, and in November of that year, the hotel owners filed for federal bankruptcy, this time in a Bay Area court, and again with the intent to reorganize the hotel’s finances.

In February, the Hirbod-led group filed a lawsuit in a Santa Clara County court in a quest to gain enough breathing room to find lenders willing to provide enough cash to pay off the BrightSpire loan.

Late last week, Superior Court Judge Shella Deen ruled against the Hirbod-led group and declined to halt the foreclosure, a decision that breached the last of the hotel ownership group’s defenses.

The transaction to foreclose on the loan and transfer the property to the lender occurred on Monday outside the Santa Clara County Superior Court in downtown San Jose.

Hirbod had attracted commitments from two lenders, but those deals ultimately weren’t completed in time to hang on to the property. It wasn’t immediately clear whether BrightSpire Capital intended to keep the hotel long-term or seek a swift sale.

The foreclosure casts uncertainty over the city’s downtown economy.

Downtown San Jose is battling to recover from the impacts of wide-ranging shutdowns five years ago to combat the spread of COVID-19 — shutdowns that torpedoed hotel markets in the Bay Area and worldwide.

A growing number of hotels in the region have suffered foreclosures, plunging property values, loan defaults and even abrupt closures. The problems are particularly acute in San Francisco and East Bay cities such as Oakland.

Signia by Hilton San Jose’s loan woes are part of what appears to be a widening set of catastrophes for hotel and office properties in the Bay Area and nationwide.

“We are seeing a values reset event for commercial real estate, including hotels,” said Mark Ritchie, president of San Jose-based real estate firm Ritchie Commercial.