SAN JOSE — The loan for a San Jose site where two huge housing towers were proposed — but never broke ground — has been bought by a group closely affiliated with the new owner of a big South Bay mall.

The undeveloped development site in downtown San Jose is a former Greyhound bus terminal where a company affiliated with China-based Z&L Properties had proposed two residential towers that would have produced a combined 708 units.

The Pacific, a 708-unit residential complex at 60 and 70 South Almaden Avenue in downtown San Jose, concept. (CBRE)

Now, a Texas-based affiliate of a group whose principal executives include real estate developer Chris Jiashu Xu and business executive William Wang has obtained the loan for the property, Santa Clara County property records show.

Shanghai Commercial Bank Ltd. San Francisco Branch assigned the loan to the affiliate of the group headed up by Wang and Xu, according to documents filed on Sept. 4 with the Santa Clara County Recorder’s Office. The precise terms of the deal weren’t disclosed.

This gambit leaves the Xu-led group poised to seize ownership of the choice downtown San Jose site through foreclosure.

The potential housing development site is at 60 and 70 South Almaden Avenue at the corner of Post Street.

The Wang- and Xu-led group also controls an affiliate that in January 2024 paid $135 million for the vast majority of Eastridge Center in east San Jose.

It’s unclear what the new owners of the loan for the downtown San Jose Greyhound terminal property will pursue as their next steps.

However, an eventual foreclosure of the site is a potential outcome, multiple real estate experts believe. After that, a development of the property would definitely be in the cards.

Why? The 1.7-acre property is deemed one of the prime housing sites in downtown San Jose.

In 2017, San Jose approved the two housing towers for the site. One tower would be 24 stories and the other 23 stories. In 2021, however, the Z&L affiliate allowed a crucial permit to lapse, which left the project in limbo.

“If a new owner can come back and get high-density housing, that could make the property much more valuable,” said David Taxin, a partner with Meacham Oppenheimer, a commercial real estate firm.

Now, by owning the loan, the Texas-based affiliate could wind up owning the property through foreclosure or deal with the Z&L affiliate that owns the property.

Buying the loan and then foreclosing on the site makes sense, in the view of commercial property experts.

“Most of the time, getting the loan transferred to a new owner is a precursor to a foreclosure and the new loan holder owning the property,” said Mark Ritchie, president of Ritchie Commercial, a San Jose-based real estate firm.

Full Standard Properties, the Z&L affiliate, bought the Greyhound terminal property in 2016 from a group headed up by Bay Area real estate executive Mark Tersini, paying $39 million, documents on file with the Santa Clara County Recorder’s Office show.

In 2019, Full Standard obtained a $19.5 million loan from Shanghai Commercial Bank Ltd., the county real estate records show. This is the loan that Shanghai Commercial Bank assigned to the Xu-controlled affiliate.

“The last thing on earth banks want to do these days is to own foreclosed real estate,” Ritchie said. “Banks don’t want to foreclose on properties if they can avoid it. By assigning the loan, the bank licks its wounds, gets out of the bad loan and just moves on.”

If the Z&L Properties affiliate loses ownership of the Greyhound terminal property, it would mark the latest failure for the company as its San Jose real estate empire unravels.

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San Jose city staffers and political leaders greeted Z&L development proposals in downtown San Jose with optimism. The city approved a slew of projects that collectively could have dramatically transformed the city’s skyline.

Instead, Z&L has completed just one project in nearly a decade: a double-tower residential complex at 188 West St. James Street with more than 600 units.

The struggling developer has sold the vast and pristine Richmond Ranch totaling 3,654 acres. Under pressure, Z&L sold an empty lot on Terraine Street.

Z&L’s affiliate still owns the site of a historic church whose neglect has caused this property near St. James Park to become one of San Jose’s most notorious sites of blight.

The Xu- and Wang-led group has plenty of real estate experience. Much of his development activity has occurred in New York City through a company Xu founded called United Construction and Development Group.

United Construction and Development’s highest-profile project is the completed Skyline Tower, a 67-story, 802-unit condo skyscraper in the Long Island City neighborhood of New York’s borough of Queens.

In downtown San Jose, a housing development makes sense at the old bus terminal site, in the view of Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

“High-density housing at that location is a no-brainer,” Staedler said. “More housing there would benefit downtown San Jose.”