Receiver seeks more time to close hotel sales

A receiver for the troubled Hilton San Francisco Union Square and Parc 55 hotels in Downtown San Francisco wants more time to close a deal with a mystery buyer.

Receiver Michelle Russo of HotelAVE asked a San Francisco court to extend the sale deadline to May 20 for the 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco, the San Francisco Business Times reported.

The Real Deal reported this month that an unknown buyer snapped up the $725 million in debt on the properties. Last summer, a judge had moved the deadline to March 31 for the sale of two of the city’s largest hotels, at 333 O’Farrell Street and 55 Cyril Magnin Street, respectively.

The judge also pushed out the lender’s foreclosure deadline to July 15 if a sale wasn’t completed by then.

In 2023, Virginia-based Park Hotels & Resorts defaulted on a $725 million loan tied to both hotels.

Russo’s sale extension request states “the Receiver has made substantial progress on a sale of the hotels to a third party… and believes she will be in a position to file a motion to approve the sale imminently.”

That aligns with this month’s report on bondholders for the debt, which states a non-binding term sheet has been executed with the buyer, according to the Business Times. But the report does note “material terms” are still being negotiated on the draft purchase and sale agreement.

“There is still a risk that these material terms are not agreed upon and [the] receiver will not be able to close the sale,” the report states.

A bondholder report from early February said the debt’s special servicer expected a deal would be finalized within 30 days, though that didn’t happen.

In 2016, the properties were appraised at $1.56 billion, with an occupancy of 90 percent and revenue per available room of $217.

They’ve since lost more than $1 billion in value, according to the Business Times. At the same time, their $553.6 million valuation last year from Kroll Bond Rating Agency “is exceedingly generous,” sources told the Business Times.

Last year, the physically joined hotels had a $34 million net operating deficit, with a 12-month occupancy of 40.5 percent and revenue per available room at $96.24, a 56 percent drop in eight years.

— Dana Bartholomew