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San Francisco Hilton in Financial District Defaults on Mortgage

The Hilton Financial District in San Francisco has defaulted on its loan, the latest major commercial failure and a sign of continuing crisis in the city’s retail and tourism sectors.

The San Francisco Chronicle reported Friday:

The owner of the Hilton Financial District at 750 Kearny St. said Wednesday that it defaulted on a $97 million loan, according to a securities filing. Portsmouth Square Inc.’s affiliate Justice Operating Company LLC was issued the notice of default for the 544-room hotel.

In the third quarter of 2023, the most recent data available, the Hilton Financial District reported $11.1 million in revenue, down from $12.3 million from the third quarter of 2022. The hotel had a net operating loss of $1.56 million in the most recent third quarter.

San Francisco tourism has rebounded partially from the worst of the pandemic but the 2024 convention calendar is lighter than it was in 2023, which is a challenge for big business-oriented hotels. Some events have left the city for cheaper places like Las Vegas. That’s a drag on a key tax revenue source for the city, which is facing a deficit of around $800 million over the next two fiscal years.

Retail flight from the city began in earnest in late 2021, when mass looting hit Union Square, triggering a national phenomenon but also reinforcing a sense of despair about the state of downtown San Francisco.

The city has had the slowest post-pandemic recovery of any major U.S. city, and has been beset by homelessness, open-air drug abuse, and crime.

 

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