The investment firm that owns two of San Francisco’s largest hotels—Hilton San Francisco Union Square and Parc 55—announced it is ceasing payments on a $725 million loan, surrendering them to its lender.
The firm cited “concerns over street conditions” as one of the reasons it’s dumping the hotels from its portfolio.
“This past week we made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan,” Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer of Park, said in a statement. “After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market. Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges – both old and new: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future. Unfortunately, the continued burden on our operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets.”
With 1,921 rooms, the Hilton San Francisco Union Square is the largest hotel in the city, while Parc 55 is the fourth largest, with 1,024 rooms.
San Francisco Mayor London Breed confirmed in a statement that the hotels will continue to operate.
"These kinds of ownerships changes do happen, but these hotels will remain open and operating and the workers will continue to be employed. Still, we know there is a lot of work ahead of us and we will continue to focus on our economic recovery. That starts with fully funding my budget to build back police staffing and expand street cleaning, changing our business taxes to help stabilize existing businesses and recruit new ones, and aggressively implementing my Roadmap to Downtown San Francisco's Future."
The announcement comes just days after the San Francisco Travel Association launched a multi-million ad campaign to bring tourists back to the city.
San Francisco’s tourism board launched a $6M ad campaign to overcome the city’s global reputation as a drug and crime-ridden hell hole. Six days later, the owner of two of the city’s biggest hotels announced it was abandoning them because it lost faith that the city can recover. pic.twitter.com/uaZRXWpD3R
— Michael Shellenberger (@shellenberger) June 6, 2023
Crazy idea for Mayor @LondonBreed & Gov. @GavinNewsom
— Michael Shellenberger (@shellenberger) June 6, 2023
Why not follow through on your promise to deploy National Guard and CHP rather than spending millions of taxpayer dollars to insist everything is fine?
The reason SF is stuck in a doom loop is bc voters went Woke and elected leaders who told voters what they wanted to hear
— Michael Shellenberger (@shellenberger) June 6, 2023
The politicians are followers not leaders
Mayor election is in 2024
Governor election is 2026
Things will get much, much worse before then