Montgomery Realty Group, the developer behind a planned 18-story hotel in San Francisco, has filed for Chapter 7 bankruptcy, The Real Deal has learned.
The petition comes just a day before a scheduled foreclosure auction of the site from the firm’s lenders.
The site, located at 447 Battery Street in the Financial District, contains the remnants of the Jones-Thierbach Coffee Company. In May 2022, the three-story, 27,000-square-foot commercial property was designated as a city landmark owing to “its association with the San Francisco coffee industry and with reconstruction of downtown San Francisco following the 1906 earthquake and fires,” according to Planning Department records.
Montgomery first submitted development proposals for the property in 2017. Initial plans called for a 19-story building with 182 hotel rooms, eight condos and a 4,700-square-foot restaurant. The proposal for the site later changed into an 18-story property with 198 hotel rooms, nine residential units and two restaurant spaces totaling nearly 7,500 square feet.
Montgomery, headed by Rajendra Maniar, filed its bankruptcy petition on Oct. 4, according to records from California’s Northern District court. The firm estimated its liabilities between $10 million and $50 million.
The company’s lenders, nonprofit organization Western Adventist Foundation and Seventh-Day Adventist school Loma Linda University, filed a notice of default on the property on May 22, claiming that Montgomery had fallen behind on nearly $12.4 million in debt. Montgomery secured the original $12 million loan on the property in 2019. The lenders scheduled the foreclosure auction on Oct. 5.
Western Adventist and Loma Linda are not the only lenders that have filed claims against the property. According to an April filing from the Civil Division of the San Francisco Sheriff’s Office, Cathay Bank filed a case against Montgomery seeking repayment of nearly $14.5 million in debt.
Montgomery’s bankruptcy adds to a growing list of distressed hotel properties in San Francisco. In March, the Huntington Hotel on Nob Hill was sold through a foreclosure auction. Months later, Park Hotels & Resorts announced that it would stop making payments on a $725 million CMBS loan. The loan was backed by two San Francisco hotels — the Hilton San Francisco Union Square and Parc 55 San Francisco.
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