San Francisco Hilton Union Square, Parc 55 Hotels Find Buyer

Two of the city’s largest hotels have a buyer after financial distress, a hotel strike and a loan downgrade.

San Francisco Superior Court Judge Charles Haines approved the sale of the Hilton Union Square and Parc 55 hotels to Newbond Holdings and Conversant Capital, CoStar reported. The sale price was undisclosed, though the value of the hotels has dropped significantly in recent years, with the properties’ combined value estimated at less than $600 million, down from a $1.56 billion appraised value in 2016.

Virginia-based Park Hotels & Resorts stopped making payments on the $725 million loan for the 1,921-room Hilton Union Square and the 1,024-room Parc 55 in 2023. The properties are the first- and third- largest hotels in the city. They took another hit last year with the citywide hotel worker strike that prompted cancellations across the city. Moody’s Ratings subsequently downgraded the loan, per CoStar.

The two downtown hotels have been overseen by court-appointed receiver Michelle Russo of Hotel Asset Value Enhancement since Park Hotels & Resorts abandoned its loan. The receiver has been trying to sell the hotels for nearly two years on behalf of Wilmington Trust, a trustee for special servicer Wells Fargo.

A previous court order set a deadline of July 29 for the sale, though no deal surfaced. In August, a judge approved a request to extend the court-appointed receiver’s ability to sell the properties until Oct. 29 — the fourth time the sale deadline was extended.

The Bay Area has seen several properties fall into loan default and foreclosure over the past year. Hotel sales fell 7.4 percent across California in the first half of this year compared to the first six months of last year.

The priciest hotel sales in Alameda County and Santa Clara County in the Bay Area this year were foreclosure sales.

Lender Invesco took back the 500-room Oakland Marriott City Center in a June foreclosure that valued the building at $70.2 million. BrightSpire Capital seized the 541-room Signia by Hilton in downtown San Jose in a May foreclosure that placed the hotel’s value at $80 million.

The Hilton Union Square and Parc 55 hotels will be managed by Hilton until at least 2040, with options to extend the contract. The hotel giant has to give its approval on the deal before it closes.

— Chris Malone Méndez