Two of San Francisco’s largest hotels, the Hilton Union Square and Parc 55, are set to be sold following a court decision after their owner defaulted on a $725 million loan. San Francisco Superior Court Judge Charles Haines approved the sale of both properties to Newbond Holdings and Conversant Capital, according to CoStar. The exact sale price was not disclosed, but the combined value of the two hotels has dropped sharply in recent years. Their estimated value is now less than $600 million, compared to an appraisal of $1.56 billion in 2016.
Park Hotels & Resorts, based in Virginia, stopped making payments on the loan for the 1,921-room Hilton Union Square and the 1,024-room Parc 55 in 2023. These properties are respectively the first- and third-largest hotels in San Francisco. The situation worsened last year when a citywide hotel worker strike led to widespread cancellations. Following these events, Moody’s Ratings downgraded the loan.
Since Park Hotels & Resorts abandoned its loan obligations, Michelle Russo of Hotel Asset Value Enhancement has acted as court-appointed receiver for both hotels. She has been trying to sell them for nearly two years on behalf of Wilmington Trust, which is serving as trustee for special servicer Wells Fargo.
A previous court order had set July 29 as a deadline for completing a sale; however, no agreement was reached by that date. In August, a judge allowed another extension for the receiver’s authority to sell until October 29—marking the fourth such extension.
The Bay Area has experienced several commercial property defaults and foreclosures over the past year. Statewide hotel sales declined by 7.4 percent during the first half of this year compared with the same period last year.
Some of this year’s highest-priced hotel transactions in Alameda County and Santa Clara County were foreclosure sales. Lender Invesco took ownership of Oakland Marriott City Center through foreclosure proceedings in June at a valuation of $70.2 million. Similarly, BrightSpire Capital acquired Signia by Hilton in downtown San Jose via foreclosure in May with an $80 million valuation.
Both Hilton Union Square and Parc 55 will continue under Hilton management until at least 2040, with options available to extend that contract further. The deal still requires final approval from Hilton before it can close.
“San Francisco Superior Court Judge Charles Haines approved the sale of the Hilton Union Square and Parc 55 hotels to Newbond Holdings and Conversant Capital,” according to CoStar.
— Chris Malone Méndez
