What is happening to San Francisco’s largest hotel: Hilton San Francisco Union Square

What is happening to San Francisco’s largest hotel: Hilton San Francisco Union Square
The Hilton San Francisco Union Square is the largest hotel in the city with 1,921 rooms. The Parc 55 has 1,024 rooms. Together, the two hotels were appraised for $1.56 billion in 2016. The owner of the two hotels owes $725 million to JP Morgan Chase. The owner has chosen to stop making payments on the debt and hand the keys over to JPMorgan Chase.
The bank can not do much else besides take the property via receivership and either auction it or use a national commercial agency to sell it. Either way, the bank wants to get it off the books as soon as possible.
We will see a lot more commercial real estate operators handing over the keys to their lenders in the next year due to low occupancy and diminished values
A lot of these commercial real estate properties are incredibly overvalued.
It is surprisingly difficult and expensive to turn commercial real estate into apartments, but it is more straightforward with hotels. The plumbing alone for each unit is a ton of added weight for internal floors that were not designed to handle it. Then you also have water heaters, individual AC unit, and fridges.
Works Cited:
https://viewfromthewing.com/san-francisco-is-a-mess-and-the-owner-of-the-citys-largest-hotel-is-just-walking-away/
https://sfist.com/2023/06/05/owner-of-sfs-largest-hotel-the-hilton-union-square-is-walking-away-surrendering-it-to-lender/
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