Park Hotels & Resorts Inc. announced it will cease making payments on a $725-million non-recourse CMBS loan secured by two of its San Francisco hotels – the 1,921-key Hilton San Francisco Union Square and the 1,024-key Parc 55 San Francisco. The loan is scheduled to mature in November.
The Tysons, VA based lodging REIT stated that they intend to work with the loan’s servicers in good faith to determine an effective path forward which would result in these hotels being removed from their portfolio. Thomas J Baltimore Jr., Chairman and CEO of Park commented “We believe it is best for our stockholders’ interests to reduce our current exposure to the San Francisco market.” He further elaborated that due record high office vacancy; concerns over street conditions; lower return on office than peer cities; and a weaker than expected citywide convention calendar through 2027 have clouded recovery prospects for this area thus necessitating removal of hotel assets from their portfolio as well as paying off associated loans which will improve balance sheet metrics significantly .
