The owner of two major hotels in downtown San Francisco is preparing to give the properties up to foreclosure as the city’s downtown decline continues, with retail shops leaving the area amid crime and homelessness.
The San Francisco Chronicle reported Monday:
The owner of two of San Francisco’s biggest hotels — Hilton San Francisco Union Square and Parc 55 — has stopped mortgage payments and plans to give up the two properties, in another sign of disinvestment in hard-hit downtown.
Park Hotels & Resorts said Monday that it stopped making payments on a $725 million loan due in November and expects the “ultimate removal of these hotels” from its portfolio. The company said it would “work in good faith with the loan’s servicers to determine the most effective path forward.”
The 1,921-room Hilton is the city’s largest hotel and the 1,024-room Parc 55 is the fourth-largest, and together they account for around 9% of the city’s hotel stock. The hotels could potentially be taken over by lenders or sold to a new group as part of the foreclosure process.
San Francisco has been suffering an exodus of major retail stores from the Union Square area over the past several months. The city also lost residents during the pandemic, and there are fewer commuters due to a shift to work-from-home in the tech industry. Amid a looming commercial real estate collapse, experts are advising the city to think about creative and drastic solutions to bring visitors back to the city before it is too late.
The Chronicle notes that tourism spending in the city is up, but convention attendance has fallen drastically and is not expected to recover for years. The cost of living in the city also remains high, despite its troubles.
Mayor London Breed has been at pains to deny that the downtown area is facing economic collapse, as have left-wing pundits eager to deflect criticism of years of soft-on-crime policies. But the crisis continues to worsen.