Lender sues to put pair of large hotels in receivership
After the investment firm behind two of San Francisco's biggest downtown hotels said it would stop paying its loans this summer, it is now likely to lose control of the properties.
Wilmington Trust, the trustee acting for the lenders of a $725 million mortgage issued for the Hilton San Francisco Union Square and Parc 55 hotels, on Monday sued Virginia real estate investment trust Park Hotels and Resorts in an effort to place the hotels into receivership.
If Wilmington is successful, a court-appointed receiver would take control of the properties, located a block away from each other, and manage them in an effort to recoup the debt or sell them.
Park Hotels declined to comment on the lawsuit on Tuesday.
The full loan for the properties is coming due next month. During an earnings call in May, Park Hotels CEO and Chairman Thomas Baltimore Jr. said the company was exploring all options for the hotels in light of the looming deadline, including seeking a loan extension and forfeiting the properties. A month later, Park Hotels announced that it would stop making payments on its mortgage.
With its 1,921 rooms, Hilton San Francisco Union Square at 333 O'Farrell St. is the city's largest hotel, and the 1,024-room Parc 55 at 55 Cyril Magnin St. ranks as the fourth largest. Both hotels were shuttered for a prolonged period during the pandemic, reopening in May 2021 and last May, respectively.
News of the receivership lawsuit comes as San Francisco prepares to host its biggest international event in decades, the highprofile Asia-Pacific Economic Cooperation, or APEC, a summit expected to draw more than 20,000 visitors downtown in November.
The influx is expected to come as a major boon to the city's ailing downtown economy, which has been heavily burdened by rising office and retail vacancies in the wake of the pandemic. APEC is expected to generate tens of thousands of hotel room nights during and in the days leading up to the event, but it is unclear how the boost would impact the Hilton Union Square and Parc 55.
Earlier this month, San Francisco's largest mall, the Westfield San Francisco Centre, came under new management after its owners stopped making payments on their $558 million mortgage. A San Francisco Superior Court judge appointed Gregg Williams of Trident Pacific to take control of the halfempty, 1.5 million-squarefoot property at 865 Market St.