The owner of San Francisco's two largest hotels STOPS making payments on its ... trends now

The owner of San Francisco's two largest hotels STOPS making payments on its ... trends now
The owner of San Francisco's two largest hotels STOPS making payments on its ... trends now

The owner of San Francisco's two largest hotels STOPS making payments on its ... trends now

The owner of two of San Francisco's largest hotels has stopped making mortgage payments on the properties and will let them go into foreclosure as historic crime rates continue to deter tourists.

Park Hotels and Resorts announced on Monday that it stopped making payments on its $725 million loan due in November for the Hilton San Francisco Union Square and Parc 55 — the largest and fourth-largest hotels in the city, respectively.

'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,' CEO Thomas Baltimore Jr said in a statement.

'Now, more than ever we believe San Francisco's path to recovery remains clouded and elongated by major challenges — both old and new' as the city becomes a ghost town with empty storefronts.

'Ultimately, the continued burden on our operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets.' 

The company will instead focus its efforts on expanding into the more in-demand Hawaii market, Baltimore said, and will 'work in good faith with the loan's servicers to determine the most effective path forward.' 

Its share prices rebounded more than 2.5 percent following the announcement, after falling 25.26 percent over the past year.

San Francisco's largest hotel, the Hilton Union Square, is set to be foreclosed upon

San Francisco's largest hotel, the Hilton Union Square, is set to be foreclosed upon

The owner of the hotel and the more modern Parc 55 (pictured) announced on Monday that it will no longer make payments on its $725 million loan

The owner of the hotel and the more modern Parc 55 (pictured) announced on Monday that it will no longer make payments on its $725 million loan

Major stores continue to back out of crime-ridden San Francisco, with a disturbing report showing 95 retailers downtown - more than half - have closed since the start of the COVID pandemic. This map shows a small selection of the big-name departures

Major stores continue to back out of crime-ridden San Francisco, with a disturbing report showing 95 retailers downtown - more than half - have closed since the start of the COVID pandemic. This map shows a small selection of the big-name departures 

Shares of Park Hotels and Resorts ticked up on Tuesday following the news

Shares of Park Hotels and Resorts ticked up on Tuesday following the news

Its share prices plummeted more than 25 percent over the past year

Its share prices plummeted more than 25 percent over the past year

The two hotels were once profitable, valued at $1.6 billion in 2016, according to CMBS loan documents.

The Hilton Union Square boasted that it was just a block away from theaters and the Powell Street cable car turnaround, Museum of Modern Art and Moscone Convention Center are all within a mile.

It has an outdoor pool, a whirlpool and the city's tallest skybar, offering panoramic views of the city.

Park Hotels and Resorts CEO Thomas Baltimore Jr said the city's path to recovery 'remains clouded'

Park Hotels and Resorts CEO Thomas Baltimore Jr said the city's path to recovery 'remains clouded'

Since it opened in 1964, the Hilton has been recognized for its unique architecture and once hosted The Beatles.

Parc 55, meanwhile, is a newer building featuring a Michelin-rated Thai restaurant.

In 2019, Hilton San Francisco Union Square and Parc 55 earned $175.4 million and $95 million in room revenue, respectively. But by 2022, those figures fell to less than $30 million each, according to The San Francisco Standard.

Park Hotels now estimates that it will save over $200 million in capital expenditures over the next five years just by offloading the properties and could even offer special dividends to shareholders of $150 to $175 million. 

The company blames record-high office vacancy of around 30 percent, concerns over street conditions, a lower rate of return to offices compared with other cities and a 'weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand' for the declining value of the properties.

It said convention-driven demand is expected to be about 40 percent lower between 2023 and 2027, compared with the pre-pandemic average.

Making matters worse, Parc 55 is located just one block away from where alleged shoplifter Banko Brown was killed in a shooting in April.

Banko Brown, 24, was shot dead after he allegedly shoplifted a Walgreens

Banko Brown, 24, was shot dead after he allegedly shoplifted a Walgreens

Surveillance footage shows Brown in a white T-shirt and gray sweatpants, walking out of the store with some bags, when he is confronted by Michael Earl-Wayne Anthony, 33

Surveillance footage shows Brown in a white T-shirt and gray sweatpants, walking out of the store with some bags, when he is confronted by Michael Earl-Wayne Anthony, 33

His death sparked protests in the city after District Attorney Brooke Jenkins ruled that Anthony 'acted in self-defense' and was not charged

His death sparked protests in the city after District Attorney Brooke Jenkins ruled that

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