Mystery buyer picks up $61M mortgage for closed Huntington Hotel

Nob Hill property has operated at a loss for decades, and will likely become apartments

Deutsche Bank USA ceo Christiana Riley with Huntington Hotel at 1075 California Street in San Francisco (Wikipedia/Bobak Ha'Eri, LinkedIn, Getty)
Deutsche Bank USA ceo Christiana Riley with Huntington Hotel at 1075 California Street in San Francisco (Wikipedia/Bobak Ha'Eri, LinkedIn, Getty)

The shuttered Huntington Hotel, which opened a century ago on San Francisco’s Nob Hill as apartments, could be converted back to its original use after a mortgage sale of at least $61 million.

A mystery buyer is picking up the delinquent mortgage for the historic Huntington at 1075 California Street, while real estate experts say it would be hard to reopen as a hotel, the San Francisco Business Times reported. The seller was the New York branch of Deutsche Bank.

Two unidentified people with knowledge of the deal confirmed the impending loan sale, but weren’t able to disclose the buyer or purchase price. The sale is expected to close ahead of a foreclosure auction set for Dec. 22, but will now likely be postponed.

The buyer could negotiate a repayment plan with the debtor, Los Angeles-based Woodridge Capital, or take the title deed and reopen the 12-story hotel.

More likely, the new loan owner could foreclose on the shuttered 135-room hotel and redevelop it for apartments, since the parcel is zoned for high-density residential use.

Industry experts say redevelopment is far more likely than reopening as a hotel, as the Huntington hasn’t made money in hospitality for nearly two decades.

In no years since 2005 has the hotel reported positive annual cash flow, Alan Reay, president of consulting firm Atlas Hospitality, who is familiar with the hotel’s finances, told the Business Times. In some years, he said the hotel has operated at a loss of more than $2 million before debt service.

“Unless the buyer of the note knows something that nobody else has been able to do, they have to be looking at it as a conversion,” Reay said, adding that the largest contributing cost has been union labor. “There’s no other way to say it: There is no reason that a hotel of this caliber and that location shouldn’t show a positive cash flow.”

Reay said it would be extremely unlikely for the property to reopen as a nonunion hotel, which could invite the ire of the union and is considered politically unwise in a pro-union town like San Francisco.

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Unite Here Local 2 represents 115 workers at the hotel across housekeeping, food service, bell and door stations, according to the union, while other unions may represent maintenance staff and front desk workers.

In New York, the Hotel and Gaming Trades Council, representing 35,000 hotel and casino workers, just blocked a proposed conversion of the shuttered Paramount Hotel in Times Square into affordable housing.

The Huntington Hotel was built as an apartment building in 1924 and is famous for its Big 4 Restaurant, named after the “Big Four” business tycoons of the era: Collis Huntington, who also gave the hotel its name; Leland Stanford; Charles Crocker; and Mark Hopkins, who has a prominent hotel named for him down the street.

The Huntington is also home to the 11,000-square-foot Nob Hill Spa, which offers one of the city’s few indoor pools. The hotel, restaurant and spa have all been closed since April 2020.

A Woodbridge Capital affiliate has owned the 135-key hotel since September 2018, when it bought the property from Grace International of Singapore for $51.9 million

Including penalties, late fees and unpaid interest, Deutsche Bank claimed it is owed a total of $61.1 million.

The loan originated in September 2018 with an initial balance of $47 million or $351,000 per key, according to the listing. It has been in default since November 2020, and reached maturity default in October 2021. Foreclosure proceedings began in August.

In September, an affiliate of Woodbridge Capital was set to lose its stake in the $2.5 billion Century Plaza Hotel redevelopment in Century City, following a foreclosure by the developer.

— Dana Bartholomew

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