[ad_1]
As San Francisco’s hotel industry slowly recovers, another high-end San Francisco hotel is in financial trouble.
Florida developer Westbrook Partners received a notice of default on a $72.5 million loan for the 155-room Four Seasons San Francisco luxury hotel on the Embarcadero, the San Francisco Business Times reported. )mortgage.
San Francisco Four Seasons Embarcadero
According to the Business Times, Westbrook purchased the hotel for $126.6 million in 2019 but defaulted on the loan by more than $3.15 million. The company has not repaid the loan since December and has 90 days to resolve the default. If Westbrook fails, lender Falls Asset Management could foreclose on the property.
The hotel joins a growing list of defaulting hotels in downtown San Francisco. The city’s two largest hotels, the Parc 55 and the San Francisco Union Square Hilton, turned to loan servicers for help last year after their owners, Park Hotels & Resorts, stopped paying the hotels’ debt.
“Business travel in San Francisco is definitely going to shrink,” said Michael Herring, senior associate at Green Street. “Many of the top industries in and around San Francisco are tech-centric. It’s no secret that the tech industry is heavily adopting Work-from-home policies have been implemented, which in many cases means less travel.”
While some large conferences, such as Salesforce’s Dreamforce, have returned to San Francisco, the city’s convention centers aren’t drawing the same crowds they were before the coronavirus outbreak.
“San Francisco was previously a very strong meetings market, and the business travel segment has not returned to 2019 levels.”
On the other hand, New York has a strong financial industry presence and Los Angeles has a strong entertainment industry presence, which makes the two metro areas different from San Francisco, he said.
“New York hotel accommodation standards are well above pre-COVID levels [revenue per available room] level at this point,” Herring said. But while New York’s urban leisure travel has recovered over the past 8 to 12 months, this has not been the case in San Francisco.
Marcus & Millichap said in its 2024 annual report: “The metro area’s hospitality industry is facing a crisis due to record office vacancy rates, a slow return of international travelers from Asia, concerns about urban safety and recent headwinds in the technology sector. A unique set of challenges.” Francisco Hotel Industry Investment Forecast. “This combination has hampered the post-pandemic momentum that the rest of the country has benefited from recently,” the report said.
The brokerage reported that San Francisco’s hotel room revenue has more room to improve this year compared with 2019.
“Buyers with a long-term view may look beyond negative news,” a Marcus & Millichap investment report said. “Rising costs, tight capital supplies, weak performance trends and well-publicized news about urban unrest are discouraging investment. Some buyers are also taking a wait-and-see approach. Attitude, too, is expected to run into trouble, especially after the 55th and Hilton Union Square hotels went into receivership last November. Some new opportunities may emerge this year, but large-scale distress and deep discounting are not expected. “
[ad_2]
Source link