OAKLAND — A big highrise hotel in downtown Oakland has tumbled into default on a delinquent loan, fresh evidence of a feeble lodging market in the Bay Area.0

The Oakland Marriott City Center hotel next to the East Bay city’s convention center is in default on its loan, documents filed on Feb. 11 with the Alameda County Recorder’s Office show.

The delinquent loan totals $100 million, the county real estate files show.

The 500-room Oakland Marriott City Center is the East Bay’s largest hotel. The lodging tower is at 1001 Broadway next to 11th Street.

Invesco CMI Investments filed the default against the hotel. Invesco CMI bought the hotel’s loan in May 2024 and now could foreclose on the landmark if the delinquency isn’t cured.

Hong Kong-based Gaw Capital bought the big downtown Oakland hotel via an affiliate in 2017 for $143 million.

The hotel is deemed to be a crucial piece of Oakland’s economic and lodging mosaic.

The financial woes that have engulfed the Oakland City Center Marriott are the latest indicator of ailments for the Bay Area lodging sector in the wake of the coronavirus.

Among the other setbacks for the hotel market in Oakland:

— The 162-room Courtyard Oakland Downtown was bought in October for $10.6 million, a jaw-dropping nosedive of 76% from its prior value.

— Hilton Oakland Airport Hotel abruptly closed its doors in August, a shutdown that eliminated 152 jobs.

— The 145-room Waterfront Hotel in Oakland’s Jack London Square shut down without warning in late January.

— The 289-room Raddison Oakland received an appraisal of $15 million in October, according to Morningstar. That was a stunning 70% plunge from the hotel’s prior value.

“You are going to see more hotels fall into default,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market. “There is a disconnect between what sellers and buyers of hotels expect the price should be. There is going to be an adjustment in pricing.”

San Francisco, Oakland and Silicon Valley — business-oriented hotel markets — are all struggling badly with their hotels.

“Downtown markets that depend on meetings, conventions, and business traffic are really having problems,” Reay said.

Lenders have been attempting to work with hotel property owners patiently. But those days could be on their last legs, which means hotel delinquencies could rise further.

“Lenders have been extending loans and pretending things might turn around,” Reay said. “Extend and pretend is coming to an end. More foreclosures are ahead. More hotel owners are going to walk away and just give the lenders the keys to their properties.”

Originally Published: February 13, 2025 at 10:40 AM PST