Trustee sale set for downtown San Jose towers

Community Towers is located in downtown San Jose.

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Nathan Donato-Weinstein: Real Estate Reporter- Silicon Valley Business Journal; Email | Twitter

The lender on two high-profile downtown office towers has filed a notice of trustee's sale on the property, a move that could lead to a foreclosure auction of the buildings.
Canadian Imperial Bank of Commerce filed the notice this month on the owners of Community Towers, a 305,000-square-foot, two-tower complex at 111 W. St. John and 111 N. Market St. The bank had lent local real estate investors John and Rosalie Feece $34 million to purchase the towers in 2006.
The trustee's sale date is Nov. 5, though foreclosure sales can be delayed indefinitely while the parties negotiate a possible settlement of the default.

"We have been diligently working with a couple of different groups and hope to have it resolved before the trustee sale," Doug Feece, President of Feece Real Estate Group, which handles leasing and financing for the property, said in a statement. "We are proud to have the building leased at 96 percent despite this difficult process."

CIBC representatives declined to comment.
The notice of sale marks the latest development in a long-running dispute between the Feece family and their lender.

In 2006, with financing in hand from CIBC, the Feece family paid $41.5 million for the 1960s-era project. The family operators took the languishing property from 65-percent occupancy to 90 percent, according to court records, and invested substantially to bring the complex into a higher-level Class B property, which had gone largely untouched since it was built.

But when the initial three-year loan with CIBC came due in 2009 — at the height of the economic crash — the borrowers were unable to find refinancing, court documents state.