SAN JOSE — The Fay in downtown San Jose was purchased by an alliance of real estate executives, ending a foreclosure ordeal that arrived on the heels of a pilot program to create affordable housing in the apartment tower.
A business entity led by Andrew Jacobson and Gary Dillabough bought the high-rise for $175 million, documents filed May 27 at the Santa Clara County Recorder’s Office show.
Andrew Jacobson, a San Jose-based real estate executive, speaks during an event on May 26, 2026, to officially launch an affordable housing program in a 336-unit, 23-story apartment tower at 10 East Reed St. in downtown San Jose. (Dai Sugano/Bay Area News Group)
The deal comes just as San Jose officials started a program to bring middle-income households to the tower by creating 197 affordable housing units in the 336-unit building.
The acquisition also breaks up a cloud of uncertainty that had loomed over the building in the wake of a foreclosure by an affiliate of New York City-based Madison Realty Capital, the lender that took ownership in January.
To bolster the deal, Madison Realty’s affiliate provided the buying group with $133.5 million in financing for their LLC’s purchase of the 23-story tower.
The new owners are based in downtown San Jose. Jacobson, an executive with Canada-based developer Westbank, said Westbank isn’t involved with The Fay at present. Dillabough is a principal executive with San Jose-based real estate firm Urban Community.
Both Jacobson and Dillabough see plenty of upside with The Fay, which opened with great fanfare in 2024 but ran into financial woes in 2025 that eventually led to the foreclosure.
“This building has great bones,” said Jacobson. “The units are spectacular.”
Under the affordable housing program, the city of San Jose leased 150 one-bedroom apartments and 47 two-bedroom units.
The lease began on May 26 and lasts 10 years, unless ended by mutual agreement, county records show. The lease also has an option for a five-year extension.
The city is providing subsidies so middle-income workers with an annual income ranging from 80% to 110% of the area median income can live in the tower.
The program is designed to help teachers, police officers, firefighters, city workers, and other public servants live closer to where they work, city officials said. Preferences will be given to people in those fields, but the units will also become available to the public at large.
Currently, about 175 of the 336 units are occupied, city officials estimated.
Interest in the affordable apartments has already begun to emerge, as the city hopes to bring hundreds of new residents to its downtown SoFA district.
“We have over a dozen applicants so far,” said Sarah Fields, a deputy director with the San Jose Housing Department. “There’s a lot of interest.”
People could begin to move into the units starting in August, Fields estimated.
The new ownership group is seeking to revamp the building and activate the empty retail spaces at the corner of East Reed and South First Street.
“We’re going to rebrand the building, change up the lobby, and get some great retail on the ground floor,” Dillabough said. “We want to bring a lot of life to this interchange and area. It’s all about the neighborhood and vibrancy.”