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Park Hotels & Resorts could lose SF hotels after not paying $725M loan

Trustee sues REIT to place Hilton Union Square and Parc 55 into receivership

Park Hotels & Resorts to likely lose two large SF hotels after not paying $725M loan
Park Hotels' Thomas Baltimore Jr. with 333 O'Farrell Street and 55 Cyril Magnin Street (Park Hotels & Resorts, Eric in SF, CC BY-SA 3.0 via Wikimedia Commons, Dead.rabbit, CC BY-SA 4.0 via Wikimedia Commons, Getty)

Park Hotels & Resorts could lose control of two of San Francisco’s largest hotels as it slams into a deadline to pay off a $725 million loan.

The Virginia-based real estate investment trust was sued by the trustee for the loan tied to the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco, the San Francisco Chronicle reported.

If Wilmington Trust, the trustee acting on behalf of the lenders, is successful, a court-appointed receiver would take control of the properties and run them to recoup the debt, or sell them. 

The Hilton Union Square, at 333 O’Farrell Street, is the biggest hotel in the city. It closed at the dawn of the pandemic and reopened 14 months later in May 2021.

The Parc 55, at 55 Cyril Magnin Street in Downtown, is the city’s fourth largest hotel. It closed for two years, reopening in May last year. 

The full loan for the properties, located a block from each other, is due next month.

During an earnings call in May, Park Hotels CEO and Chairman Thomas Baltimore Jr. said the REIT was exploring all options for the hotels, including seeking a loan extension and forfeiting the properties. 

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A month later, Park Hotels announced that it would stop making payments on its mortgage. 

The receivership lawsuit comes as San Francisco prepares to host its biggest global conference in decades: the Asia-Pacific Economic Cooperation, or APEC. The summit is expected to draw more than 20,000 visitors to Downtown in November.

Earlier this month, the city’s largest mall, the Westfield San Francisco Centre, came under new management after its owners stopped making payments on their $558 million mortgage. 

A San Francisco Superior Court judge appointed Gregg Williams of Newport Beach-based Trident Pacific to take control of the 1.5 million-square-foot mall at 865 Market Street. 

— Dana Bartholomew

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Park Hotels' Thomas Baltimore Jr. with 333 O'Farrell Street (left) and 55 Cyril Magnin Street (right) (Getty, Park Hotels, University of Virginia, Eric in SF, CC BY-SA 3.0 - via Wikimedia Commons, Dead.rabbit, CC BY-SA 4.0 - via Wikimedia Commons)
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