Crime-Ridden Chaos Forces Top Hotel Chain To Make A BOLD Move In San Francisco

Written By BlabberBuzz | Thursday, 08 June 2023 11:45 PM
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Crime-Ridden Chaos Forces Top Hotel Chain To Make A BOLD Move In San Francisco

Park Hotels and Resorts CEO, Thomas Baltimore Jr., announced on Monday that the company has ceased making mortgage payments on its $725 million loan due in November for two San Francisco locations.

The company stated on its website that it intends to work with loan servicers to determine the most effective path forward, which is expected to result in the ultimate removal of these hotels from its portfolio.

Baltimore Jr. explained that the decision was made after much thought and consideration, believing that it is in the best interest of Park's stockholders to reduce their current exposure to the San Francisco market. He cited several challenges that the city is facing, including record high office vacancy, concerns over street conditions, and lower return to office than peer cities. Additionally, a weaker-than-expected citywide convention calendar through 2027 will negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future.

Unfortunately, the continued burden on the company's operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets, the CEO concluded. The Hilton San Francisco Union Square location is the largest hotel in the city, and the Parc 55 location is the fourth largest, according to the Daily Mail.

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The move comes as businesses around the city close their doors due to rising crime. Companies like Old Navy, Nordstrom, Whole Foods, and T-Mobile, among others, have all announced they're leaving, citing rampant retail theft, violence from homeless vagrants, and loss of foot traffic. One store owner claimed the city was worse than his home country of Afghanistan last week.

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San Francisco has been the slowest city in the country to recover its foot traffic since the COVID-19 pandemic, a Willamette Week survey of cellphone data in August showed. The town had only recovered 31% of its activity. Park Hotels expects to save over $200 million in capital expenditures over five years by letting the properties foreclose.

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