Another Distressed Hotel Sale Hits San Francisco

Another distressed San Francisco hotel has traded hands.

New York-based EOS Investors is purchasing The Barnes San Francisco hotel at 225 Powell Street in Union Square for an undisclosed price, the San Francisco Business Times reported. An affiliate of New York real estate company AWH Partners and San Francisco-based private equity firm Roxborough Group is selling the 189-key property.

The lodging, formerly known as Villa Florence, underwent a $12 million renovation effort under AWH and Roxborough’s leadership that revamped the lobby, guest rooms and ground-floor bar and restaurant. The property reopened for business in 2023.

Late last year, the owners defaulted on a $68 million loan tied to the property, raising the specter of foreclosure. Terms of EOS Investors’ purchase have not been made public, but if the firm is acquiring the property via purchase of AWH and Roxborough’s debt, it would be a notable discount from the $87.5 million that the former owners paid in 2021. AWH and Roxborough acquired the Barnes from Pebblebrook Hotel Trust for $462,983 per key during Pebblebrook’s pandemic-era sell-off in San Francisco.

EOS Investors has picked up hotels in San Francisco before, particularly in Fisherman’s Wharf. The company acquired Hotel Zoe Fisherman’s Wharf in 2023 for $68.5 million and the Hyatt Centric Fisherman’s Wharf last year for $80 million.

The Barnes handover marks the latest debt-distressed hotel sale in San Francisco and the Bay Area at large, which has been plagued with loan defaults and foreclosures over the past year. In the fall, two of San Francisco’s largest hotels, the Parc 55 and Hilton Union Square, were acquired by New York-based Newbond Holdings and Conversant Capital after its previous owners defaulted on a $725 million loan linked to the properties. Earlier this month, the distressed Stanford Court Hotel in Nob Hill was the latest such San Francisco property to hit the market.

— Chris Malone Méndez