Major San Francisco hotel investor will stop making loan payments
SAN FRANCISCO -- Downtown San Francisco has been dealt another blow after an investor in one of its largest hotels said it would stop paying its loans.
Park Hotels and Resorts, the investment firm that owns Hilton San Francisco Union Square and Parc 55 hotels, said Monday that is has ceased payments on a $725 million loan as looks to reduce its presence in the city. The hotels have nearly 3,000 rooms, combined.
In a statement, the firm's CEO, Thomas Baltimore, Jr., said that San Francisco's "path to recovery remains clouded and elongated by major challenges" including office vacancies caused by companies letting employees work-from-home, a "weaker than expected citywide convention calendar" through 2027 and "concerns over street conditions."
"Unfortunately, the continued burden on our operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets," he concluded. The hotels will be given back to the lender.
An investor presentation from Park reveals that San Francisco accounted for 16% of its business in 2019, then fell to just 3% over the past 12 months following the pandemic. Park still owns JW Marriott Union Square (344 rooms) and the Hyatt Centric Fisherman's Wharf (316 rooms), but it has sold off two other hotels in recent years, according to the San Francisco Standard.
Park said it will continue to work with the loan servicers but ultimately will look to remove the hotels from its portfolio.
The hotels are expected to remain open, though it's not immediately clear who may buy them.
Retail and hospitality have been hit hard in downtown San Francisco. Nordstrom said last month it was closing both of its stores there, citing the changing "dynamics" of the area. Prior to that a year-old Whole Foods said it was temporarily closing because of worker safety. San Francisco Standard has tracked at least 20 closures of major stores since 2020, including Anthropologie, Office Depot and CB2.
Property crimes in San Francisco have garnered national attention because of several attention-grabbing videos of thieves in action. Though still well below 2017 levels, the city saw a 23% increase in property crimes between 2020 and 2022, with spikes in burglary and theft headlining the surge, according to San Francisco Police Department data.
Meanwhile, violent crime statistics in San Francisco have remained relatively steady in recent years. Preliminary police data reports 12 homicides in San Francisco this year, an uptick of 20% compared to the same period in the previous year. In total, there were 56 homicides in San Francisco in 2022, which is the same number of homicides the city saw in 2021.