Two Major Hotels Abandoning San Francisco Because Streets are No Longer Safe
“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.”
The owner of two major hotels is bailing on the city of San Francisco, citing the ongoing crime problem. This is more evidence of the ‘doom loop’ critics of the city have talked about in recent months.
San Francisco used to be seen as a popular city for business conventions, and of course the city’s hotels have been a major factor in that aspect of the city’s economy.
The FOX Business Network reports:
Major hotelier abandoning San Francisco properties, says city’s ‘path to recovery remains clouded’
One of the largest publicly traded real estate investment trusts in the U.S. plans to close two of San Francisco’s major downtown hotels, saying the city’s streets are unsafe and expressing doubts about the area’s ability to recover.
Park Hotels & Resorts Inc. announced this week that it stopped making payments on a $725 million loan that secured both its 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco properties and expects to remove them from its portfolio, citing several “major challenges” in the California city.
“This past week we made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan,” Park Hotels CEO Thomas J. Baltimore Jr. 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,” Baltimore said.
Here’s a local video report:
Michael Shellenberger, who wrote the book ‘San Fransicko,’ notes that this news comes just after the city spent millions on an ad campaign aimed at saving tourism:
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
“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… a path to recovery remains clouded and elongated by major challenges, old and new”https://t.co/KcIx2J4fXw
— Michael Shellenberger (@shellenberger) June 6, 2023
Crazy idea for Mayor @LondonBreed & Gov. @GavinNewsom
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?
— Michael Shellenberger (@shellenberger) June 6, 2023
I mean, you realize that foreign correspondents are capable of seeing for themselves what’s total disaster the city is, right?
This was the cover of FT pic.twitter.com/ECb2ryu9pJ
— Michael Shellenberger (@shellenberger) June 6, 2023
Gov. @GavinNewsom spends his days obsessing about how to become president and trolling red state governors
Mayor @LondonBreed is disrespected by her own employees
Neither is capable of making or following through on difficult decisions
They do what the interest groups demand
— Michael Shellenberger (@shellenberger) June 6, 2023
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
The politicians are followers not leaders
Mayor election is in 2024
Governor election is 2026
Things will get much, much worse before then
— Michael Shellenberger (@shellenberger) June 6, 2023
When will the people of San Francisco decide that they have had enough?
Featured image via YouTube.
DONATE
Donations tax deductible
to the full extent allowed by law.
Comments
I don’t blame them for a second. How can a higher end hotel operate in crazy place like SF..
BTW, hotels all over are now accepting emergency housing vouchers for rooms.. Not dumps,, normal hotels, like Holiday Inn Express. I am reluctant to book a room in a chain that does this. $160 a night to stay next door to a homeless family of 8. SMH.
There’s another thing going on: society has broken down so far that even “good” brands of medium and low-medium price hotels often have stuff going on they cannot control due to lax law enforcement, or management being afraid of igniting a riot.
Used to be when I was traveling, I’d pull over early afternoon and use a booking app to get a room not too much further along. Now, I no longer do that. Too many times I have rolled in to see a parking lot with people going back and forth between vehicles. Doors open and “boom chucka muthaf…ah” music thudding away. What I do now is roll into a town and look around. I depend on situational awareness to give a place a yes, a no, a maybe. I will not, under any circumstances, stay in Memphis, St. Louis, or any big city with a population more than about 15% black, and this is especially true for Friday nights and weekend nights.
It’s not just San Francisco in a doom loop. The nation is dying.
“even “good” brands of medium and low-medium price hotels often have stuff going on they cannot control due to lax law enforcement, or management being afraid of igniting a riot.”
SO glad I’m an RVer.
Complete with 00 buck.
You likely have different needs. I have no room, budget, or desire for a vehicle I might use 3 times every two years.
They will stuff it full of illegals and call it a win.
I resided in SFO from about late 1973 through early spring of 1977. It was quirky, a bit expensive, but interesting in so many ways. Culturally, it was such that it supported not one, but two, commercial classical music stations, and the variety of music and commentary up and down the dial was amazing. Plenty of good eats at affordable prices. It was not ALL sunshine and bluebirds, but it was an amazing place to be at that time.
I visited the city in 1998 when I was in junior high school and saw my first homeless person, my first public injection of drugs, and my first seal.
It was the first big city I ever visited and resolved to forever avoid cities.
Seals can do that to you…
/s
Hell, look what they did to Osama.
My first job out of high school was in SF. I wore a dress, heels, coat, and a hat. I loved it.
With respect, how could ANY woman LIKE wearing high heels?
High heels are great! I loved to wear them when I was younger (not so much nowadays). The problem heels are platforms, so hard to walk in because you kind of plunk along since you can’t move your foot at all (there is no give in them at all). I didn’t love the revival of platforms in the ’90s and was very glad to see that particular fad die anew. But high heels? LOVE love love them!
Hard to generate money to give away with no tax base.
Easy. Just take it from the ‘rich’, or print more if you’re the feds.
“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.”
In other words, we be getting out while the getting is good.
In any case, the S.F city council might be able to laugh off the closing of a bunch of CVS retailers but when major hospitality providers are beginning to abandon the city then you’ve got major financial problems heading your way you simply cannot ignore.
How can a hotel make a buck when everybody can sleep on the street for free?
Even if it’s non-recourse debt they’re trashing their bond rating to dump those properties on the lenders. I don’t know how long Moody’s and S&P keep companies in the dog house but this will hurt for a long time.
Living in SF’s Nobberloin on Bush and Leavenworth.
Early morning, probably on a Saturday crossing the NE intersection at Union Square. Heroin junkie sprawled on the roadway halfway across the street. I walk around him. A few more steps down the street there’s a big pile of poo in a shop doorway. That’s 1984.
2023. I live in the north valley not far from Sacramento. I see junkies and degenerate alkies downtown chuffing cigarettes and smoking weed. I see them at the grocery store strip mall sprawled out – blocking egress along the walkways in front of CVS.
They stare-down the suburbanite Karens and the Kens. Glaring, sullen impertinence on full display.
The other naive fools buy the hoboes good food – a $10 deli sandwich – the impertinent hobo-jackass eats two bites of it and toss it to the curb. I literally saw a hobo do that. Discarded, half eaten food litters sidewalks.
I was asked for money to buy food from a panhandler in downtown SLC in 2001 (I was pregnant with my oldest). I had just come from the farmers market so instead I offered a loaf of expensive artisan bread and some fresh peaches.
My generosity was turned down: “I cannot eat that kind of food.”
I shrugged and walked away.
They only eat food from a gas station or ramen noodles with a canned meat added to it.
One key thing in the Hilton/Parc 55 matter is not just that they are closing. Dozens of major retail outlets and hotels have gone out of business and closed. The Park Hotels & Resorts Inc. literally did the equivalent of mailing the keys to the bank and walking away. That is an order of magnitude worse than going out of business. It is being willing to sacrifice their credit ratings in the future because they believe that there is no way that doing business in Frisco can ever be feasible or profitable.
SF is scrod. Bring popcorn to watch.
Subotai Bahadur
This is all for the goof. SF is going to need the rooms to house all the illegals DeSantis and Abbott are going to be sending them.
When you don’t believe in him, God works in REALLY mysterious ways.
Park Hotels & Resorts Inc. announced this week that it stopped making payments on a $725 million loan that secured both its 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco properties . . .
Wow, so how does an company simply “stop making payments on a $750 million dollar loan” without major repercussions for that company. I’m sure the bank that holds that loan isn’t going to be the happiest when they find out.
No they won’t. Nor will we if this is the ‘first domino’ that sets the commercial lending market into crisis. A lot of economists have been calling the commercial real estate market ‘the next shoe to drop’ and this could be the start of it.
As far as what they can do about it, probably not much. These large commercial deals are normally structured in such a way as to shield the parent company from too much liability, by using subsidiary companies, etc.
And I highly doubt any bank extending a $750 MILLION dollar loan to a business would allow the loan agreement to be written such that the debtor (Park Hotels & Resorts Inc.) can simply walk away from the agreement without penalty.
Park Hotels & Resorts Inc. bond rating will be downgraded. They will find it difficult to find banks willing to offer them loans. And the ones that might do so will offer those loans at a much higher interest rate with stricter terms than they might have gotten in the past.
And no, the parent company cannot hide behind “subsidiary companies” to shield them from the consequences of their actions. It all traces back to the parent company and will affect them negatively in the future.
You don’t voluntarily default on a $750 MILLION loan without penalty. No matter who you are.
They likely get their bond rating downgraded, which will probably cost millions of dollars in future interest.
But they have calculated that staying open will be more expensive.
That is the bottom line. Expect similar occurrences in Seattle, Portland etc.
Wanna bet the next time Park Hotels & Resorts Inc. goes out looking for another massive loan to float a couple more luxury hotels they’re gonna find out the real cost of voluntarily defaulting on this massive $750 MILLION loan? It ain’t gonna be pretty. That is even if they can find a bank stupid enough to give them a loan?
Two major hotels closing the doors. I don’t see any other investors or chains picking them up.
Question for any LI-ers residing in SFO or the Vay Area: which major hotel is next?
Wouldn’t surprise me if the local government took these places over to provide ‘free’ housing for the homeless.
They’re outdoors, ya’ know? They’re tired. They been walking all day. They can’t find no job. You been talking about the front rent, you’ll be lucky to get any back rent.
Yeah, good luck on that one. If the bank that had the loan with Park Hotels & Resorts Inc. are now the new owners of these two luxury hotels then the last thing they’ll want to happen is that the San Francisco city council takes them over for free housing for the homeless. The bank will want to sell them for as much as they can get attempt to recoup as much money as they can from the defaulted loan. Banks do NOT want to own real estate.
Are they closing these two hotels, or are they going to continue to operate them while not making payments to the lenders? There is a huge difference.
A huge difference that would land them in court very quickly. The lender would not tolerate such a move.
Did you not read the post. Park Hotels & Resorts Inc. are leaving the S.F. market as it is no longer profitable for them to operate these luxury hotels. And they do not see the outlook changing in the near or far future. So the hotels will be closed. The employees will be fired. And since they’ve voluntarily defaulted on their loan I’m assuming title to the infrastructure and buildings will end up with the bank. And they will quickly try and sell the properties for the most money they can get to attempt to recoup as much money they can due to the failed loan;
No streets in America are safe anymore – and not because of the lunatics and street criminals the democrat party has unleashed on the streets.
We are no longer safe on our streets or in our homes because of the fascists running our government.
Amen.
The threat from the street mobs is one thing.
The threat from the tyrants persecuting you for defending yourself from the street mobs is four times worse.
When that multiplier gets large enough, it won’t cost you any more to take out some of those tyrants as you refuse to “cooperate” in your own destruction.
Hey, look at the bright side, . . . drag queen shows and sex change surgery for SF children are at all-time highs!
Vote Dem 2024!
Will the city take over the hotels and turn them into homeless or immigrant shelters?
Yes, and several voting booths, overseen by Antifa Dems, will be located at each hotel.
You don’t have any objections to democracy do you??
I’m visualizing Maj “King” Kong yelling “yee haw!” while riding a nuclear bomb. It looks like the mayor and governor are successfully channeling both Orwell and Kubrick and shocked at the predictable results.
Thus is the high price of inept political leadership.
I stayed in San Francisco for a few weeks back in 81 on business. One afternoon I dropped my rental car keys walking down Polk Street, and I had to kick them all the way to Van Ness Ave before picking them up.
Mentally disturbed and delusional persons are everywhere in SF, from the gutter to city hall.
The hotels are not even trying to negotiate a haircut to their note to reflect the current hotel value.
The owners have concluded that San Francisco is doomed!
Sounds like rational business decisions to me.