After two years in distress, buyers have swooped in on two of San Francisco’s biggest hotels.
Two New York-based companies are in contract to buy the Parc 55 and Hilton Union Square hotels, the San Francisco Chronicle reported. A court-appointed receiver tapped Newbond Holdings and Conversant Capital to buy the lodging properties in Union Square.
The price of the transaction was redacted in court filings, though it’s estimated to be one of the biggest sales in the city this year. The buyers were required to put down two deposits of $10 million each earlier this summer, according to the Chronicle.
A bondholder report in July placed their current combined appraised value between $450 million to $500 million. The two hotels had a combined appraised value of nearly $1.6 billion in 2016.
The bondholder report said the purchase was contingent on a buyer modifying, extending and assuming the distressed $725 million commercial mortgage-backed securities loan, the San Francisco Standard reported. The buyers are also required to provide funding to help with the hotels’ cash flow challenges and to pay for their renovations.
The sale marks the conclusion of a years-long saga at the two Union Square hotels.
In 2023, former owner Park Hotels & Resorts, an affiliate of Hilton Worldwide Holdings, defaulted on its $725 million loan on the properties. They were turned over to receiver Michelle Russo of Hotel Asset Value Enhancement, who looked for a buyer for nearly two years on behalf of Wilmington Trust, a trustee for special servicer Wells Fargo. Foreclosure appeared imminent and sales deadlines were extended numerous times before investors stepped in.
Hilton Union Square is the city’s largest hotel with 1,921 rooms. The Parc 55, also a Hilton property, is among the top five with 1,024 keys.
Though the two major San Francisco hotels have found buyers, they’re far from the only hotels in the Bay Area on the market amid distress. Several lodging properties in Oakland, Berkeley and San Jose, among other East and South Bay enclaves, have fallen into foreclosure over the past two years.
The outlook for tourism could be bright, however. Visitors to San Francisco are expected to grow to 23.5 million this year and spend nearly $9.4 billion, up from 23.3 million visitors and almost $9.3 billion last year, according to the Chronicle.
Correction: This story has been edited to reflect there are two partners in the deal.