The real estate investment trust Park Hotels & Resorts (NYSE:PK) is defaulting on the loan for two of its San Francisco hotels, which it is releasing from its portfolio after citing concerns on the city’s “street conditions” and economy.
SFGate.com reported Hilton San Francisco Union Square and Parc 55, two prominent hotels in the city’s downtown, were the properties in a $725 million non-recourse, commercial mortgage-backed security loan with Wells Fargo (NYSE:WFC) that is being forfeited. Park Hotels & Resorts was created in 2017 as a spinoff from Hilton Worldwide (NYSE:HLT), which will take over the operations and management of the two hotels.
Park Hotels & Resorts CEO and Chairman Thomas J. Baltimore Jr. issued a statement explaining it was a “very difficult, but necessary decision” to cease payments on the loan, claiming it had become a burden on is balance sheet. He also cited problems within San Francisco as contributing to the decision, pointing to “concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027.”
The 1,921-room Hilton San Francisco Union Square is the largest hotel in the city; the Parc 55 is adjacent to the property and offers 1,024 rooms.
Photo of the Hilton San Franciso Union Square by Eric in SF / Wikimedia Commons
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