A major tech campus in Mountain View has defaulted on its loan, putting its future in jeopardy as Citi Real Estate Funding moves to foreclose on the property.
Loan Default and Foreclosure Threat
Documents filed with the Santa Clara County Recorder’s Office on Monday reveal that the Terra Bella Tech Park, a sprawling 10-building complex near U.S. Highway 101 and North Shoreline Boulevard, has fallen into financial distress.
The owner, Zappettini Capital Management, defaulted on a $120 million loan secured in 2019, with the outstanding balance now reaching $126.3 million due to late payments, fees, and penalties. If the debt is not settled, Citi Real Estate Funding could seize control of the property.
Bay Area’s Struggling Office Market
This default highlights the ongoing struggles in the Bay Area’s commercial real estate sector, where high vacancy rates, declining rental prices, and falling property values have created a challenging environment. Many office spaces remain empty as companies scale back on their real estate footprints due to remote work trends and tech industry layoffs.
Zappettini Capital, a San Francisco-based investment firm with deep roots in real estate, owns the tech park through multiple affiliated entities. The company had previously secured financing from Citi Real Estate Funding, German American Capital, and JPMorgan Chase Bank, expecting the property to benefit from Mountain View’s long-term development vision.
A Stark Contrast to Previous Projections
When the loan was originally secured, financial firms were optimistic about the site’s future. A 2019 Securities and Exchange Commission filing highlighted Mountain View’s Terra Bella Vision Plan, a large-scale redevelopment effort expected to enhance property values in the area. At the time, industry enthusiasm was at a peak, with projections that the transformation would significantly boost the tech park’s worth over the next three to five years.
However, unforeseen challenges—including the COVID-19 pandemic, widespread business shutdowns, and a post-pandemic shift in workspace demand—have had the opposite effect. Instead of rising values, commercial properties like Terra Bella Tech Park have faced declining interest and financial instability.
Property Details and Potential Sale
The tech campus comprises 10 office and research buildings, totaling 254,400 square feet, with individual buildings ranging from 15,700 to 29,700 square feet. The affected addresses include:
- 1212, 1215, 1245, 1255, 1277, and 1305 Terra Bella Ave.
- 1330-1350 West Middlefield Road
- 850-890 North Shoreline Blvd.
Despite the foreclosure proceedings, Zappettini Capital Management still has a window of opportunity to avoid losing the property. According to Citi Real Estate Funding’s loan default filing, the ownership group has approximately three months to secure a buyer before the foreclosure process is finalized.
“Notwithstanding the fact that your property is in foreclosure, you may offer your property for sale, provided the sale is concluded prior to the conclusion of the foreclosure,” Citi Real Estate Funding stated in the filing.
What’s Next?
The outcome of this foreclosure process will depend on whether the Zappettini family can find a buyer willing to take over the distressed asset. With the Bay Area’s office market still facing headwinds, the future of Terra Bella Tech Park remains uncertain.
For now, all eyes are on potential investors and the broader commercial real estate market to see whether this once-promising tech hub can be salvaged or if it will become another casualty of the shifting economic landscape.
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