A judge has named a receiver to take control of two large hotels given up by Park Hotels & Resorts in San Francisco, with plans to sell them in less than a year.
Michelle Russo, CEO of Hotel Asset Value Enhancement, will serve as receiver for the 1,921-room Hilton Union Square at 333 O’Farrell Street and the 1,024-room Parc 55 at 55 Cyril Magnin Street, the San Francisco Chronicle reported.
The move comes as the Virginia-based real estate investment trust approached a November deadline to pay a $725 million mortgage tied to the hotels, after it stopped making payments in June.
Wilmington Trust, a trustee acting on behalf of the lenders, had filed a lawsuit this month to get the court to appoint a receiver for both properties.
The Hilton Union Square 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 is the city’s fourth largest hotel. It closed for two years, reopening in May last year.
Park Hotels said on Thursday the receiver will have until Sept. 1 to sell the hotels. If Russo misses the deadline, the receivership will end in a non-judicial foreclosure.
Hotel Asset Value Enhancement will be paid $48,000 for the first month and $32,000 each month afterward for overseeing hotel operations, creating budgets and managing money.
The Rhode Island-based firm will get a 0.05 percent commission fee if the hotels are sold with court approval.
Hilton will continue to manage the properties under their current names, while Unite Here Local 2, a union for hotel workers, has told the Chronicle that its labor contracts will stay in place.
The four San Francisco hotels owned by Park Hotels were 57.7 percent occupied in the first quarter. The REIT’s surrendering nearly 3,000 hotel rooms follows a Downtown shift to remote work, a slow rebound by tourists and concerns about crime.
This month, a judge appointed Gregg Williams of Trident Pacific Real Estate Group to take over the city’s largest mall at 865 Market Street.
The Newport Beach-based receiver is paid $30,000 a month to oversee the half-empty San Francisco Centre, surrendered by Westfield and Brookfield Properties, which ceased making payments on a $558 million loan tied to the nine-story property earlier this year.
— Dana Bartholomew
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