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Wednesday, August 4, 2021

First sale begins for bankrupt developer’s Bay Area real estate empire

SAN JOSE – An apartment complex in downtown San Jose is set to be the first property unloaded as part of auctioning off pieces of a bankrupt developer’s real estate empire implicated in a federal fraud case.

The first property to find a potential buyer — at a cost of $54.2 million — is a large apartment building at 138 Ballback St. in downtown San Jose, according to papers filed July 16 in US District Court in a fraud case involving bankrupt developer Sanjiv Teacher.

Court-appointed receiver David Stapleton is at the center of Securities and Exchange Commission fraud proceedings attempting to sell properties owned by Acharya, chairman of Silicon Sage Builders and a real estate executive.

“The receiver has accepted an offer from Carmel Partners Realty VII to purchase the property,” documents on file with the Federal Court show.

The proposed buyer is an affiliate of San Francisco-based Carmel Partners, which specializes in the ownership of apartment buildings.

The apartment building on Ballback Street is a favorite in San Jose’s trendy and charming South First Area, or just a short walk from the Sofa District and the city’s convention center.

The residential complex, which was completed in 2019, also appears to be in healthy shape.

According to court papers, “almost all” of the 101 residential units are currently on rent.

The receiver expects to sell the Silicon SEZ assets at a price high enough to enable investors and creditors associated with Acharya’s projects to recover at least some of Acharya’s money.

“The property was aggressively marketed and was on the market first,” said the receiver, regarding efforts to find a buyer for 138 Baalback cents.

JLL, a commercial real estate firm, handled the marketing of the apartment complex and arranged the transactions on behalf of the receiver. JLL has conducted at least 47 rounds of apartment building and several rounds of bidding, Court Paper Show.

The entrance area of ​​a 101-unit apartment building at 138 Ballback St. in Downtown Jose. // George Avalos / Bay Area Newsgroup

Many other master-held properties, some complete, some partially built, and some completely undeveloped, are also expected to be marketed for sale by the receiver.

The Bay Area properties involved in the marketing effort were originally proposed or developed by Acharya and his flagship Silicon SEZ builders. The Securities and Exchange Commission has accused Acharya and Silicon SEZ of fraud. Silicon SEZ was sent to court-ordered receivership this year.

Silicon SEZ projects and properties in San Jose, Fremont, Santa Clara, Sunnyvale, Morgan Hill and Hayward face various futures, according to records on file with the US District Court in San Francisco.

Ballback Street apartment transactions in downtown San Jose, if completed with the conditions outlined in the court papers, can achieve the primary goals of property sales.

The sale of the property will be used to pay the lender on the apartment complex, as well as to pay the mechanic’s lien that eight different contractors filed against the building. The lender will be paid approximately $39.9 million. The contractors are owed a combined $400,000.

After paying a commission and closing costs to JLL, there will be several million left to pay the creditors and investors of Silicon SEZ and Acharya.

“The receiver expects the receivership estate to net approximately $12.6 million from the sale,” the court documents state.

A 101-unit apartment building at 138 Ballback St. in Downtown Jose. // George Avalos / Bay Area Newsgroup

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