Park Hotels Walks Away from $725M CMBS on Two San Francisco Properties
Park Hotels & Resorts Inc. said it would cease making payments toward a $725-million non-recourse CMBS loan which is scheduled to mature in November and is secured by two of its San Francisco hotels—the 1,921-key Hilton San Francisco Union Square and the 1,024-key Parc 55 San Francisco.
The Tysons, VA-based lodging REIT said it intends to work in good faith with the loan’s servicers to determine the most effective path forward, which is expected to result in ultimate removal of these hotels from its portfolio.
“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,” said Thomas J. Baltimore, Jr., chairman and CEO of Park.
He continued, “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.”
Removing the hotel and the loan, Baltimore added, “will substantially improve our balance sheet and operating metrics.”
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).