Walking away San Francisco style
One of the largest hotels in the US — the 1,921-room Hilton Union Sq in SF — has been forfeited from owner to lender.
The lender was First Republic. Now Chase. The loan amount was approximately $260,000 per room. Can you build a 1 bedroom/1 bathroom in San Francisco for less?
dormitories? Supportive Living? https://t.co/i1Rid03Flt
— Zach Klein (@zachklein) June 5, 2023
leave ship
Please note that the owner of SF’s largest hotel, the Hilton Union Square, is walking away and leaving it to the lender
Virginia-based REIT Park Hotels & Resorts has decided to stop making payments on a $725 million loan, the SF Business Times reports today, essentially ceding over 2,900 hotel rooms and hotel facilities to its lender. These include the 1,921-room Hilton San Francisco Union Square, which is San Francisco’s largest hotel to occupy an entire city block and one of the largest hotels in the country outside of Las Vegas.
Park Hotels & Resorts is also foregoing the 1,024-room Parc 55, citing the ongoing debt burden of the two hotels in its portfolio and several factors that have made the SF market less attractive to their company.
“After much thought and deliberation, we believe it is in the best interest of Park shareholders to materially reduce our current exposure to the San Francisco market,” said Thomas J. Baltimore, CEO of Park Hotels, in a statement. “We believe more than ever that San Francisco’s path to recovery will continue to be marred and prolonged by major challenges, both old and new: record-breaking office vacancies; concerns about road conditions; lower return to office than comparison cities; and a weaker than expected citywide convention calendar through 2027, which will negatively impact business and leisure demand.”
The two hotels were valued at $1.56 billion in total for the current loan, as estimated in 2016. So it’s a significant move that Park Hotels would deleverage less than half that amount – and as one analyst told the Business Times, “It says they’re not optimistic about the business of corporate travel or conventions and… conventions.” Return soon to downtown San Francisco.
Away from 50% equity?!
Not really. This means that the estimated value is bullsheet.
Q: And if the appraised value of one of the largest hotels outside of Las Vegas is Bullsheet, what does that say about the value of any building in downtown San Francisco?
A: It’s all bullsheet
Property tax questions and answers
Q: What are San Francisco property taxes?
A: Secured property taxes are calculated based on the property’s appraised value, which is determined annually by the Office of the Assessor-Recorder. The secured property tax rate for fiscal year 2022-23 is 1.17973782%.
I don’t know how the Union Square building or the 1,024-room Parc 55 building rated.
But I’m willing to surmise that the whole damn town is valued at values no one in their right mind would pay.
Other examples
Q: Mish, do you have any other examples of such a claim?
A: Of course, otherwise I wouldn’t have asked.
Second San Francisco Office Tower is selling for 70% off the original list price
Wolf Richter just reported today that the second San Francisco office tower is selling for 70% off the original list price
For the past two years, the burning question has been what these largely vacant older office towers in San Francisco are worth.
The market was frozen. There were no transactions because no one knew what anything was worth as, in just a few short years, the San Francisco office market has gone from being one of the trendiest office markets in the US with a 7% vacancy rate in 2019 and some of the highest rents in the USA to closure through home office. About 33% of all office space is currently available for rent – worse than Houston, which was the worst office market in the US for years.
So now there’s the second deal in about a month – although the sale isn’t over yet. Wells Fargo found a buyer for one of its San Francisco office towers, the 13-story, 32,000-square-foot 1960s tower at 550 California, across the street from and around the corner from the headquarters tower in Montgomery.
Wells Fargo bought the tower in 2005 for $108 million. The building is cleared. Last year, the company was listed for $160 million, but was subsequently delisted after it reportedly received bids under $40 million. Earlier this year, the company hired real estate investment bank Eastdil Secured to relist the tower.
The company has now closed a deal for about $42.6 million to $46 million ($120 to $130 per square foot), according to sources cited by the San Francisco Business Times — the name of the buyer was not disclosed. That would be 71% below the original asking price and almost 60% below the purchase price in 2005.
reassessments required
Every San Francisco homeowner should push for a property tax adjustment.
And guess what will happen to the city if there are honest assessments.
The San Francisco Board of Directors unanimously approves reparations of $5 million per person
In case you forgot (or didn’t know), please note that the San Francisco Board of Directors unanimously supports compensatory payments of $5 million per person
People who never owned slaves would make payments to people who never were slaves in a state that never had slaves.
Stanford University’s Hoover Institution calculated that the proposal would cost non-black families in the city at least $600,000.
Get lost.
This post originated on MishTalk.Com.
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