Posted on 06/05/2023 6:01:20 PM PDT by dynachrome
Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE:PK) today announced that, starting in June, it ceased making payments toward the $725 million non-recourse CMBS loan which is scheduled to mature in November 2023, and is secured by two of its San Francisco hotels—the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco. The Company intends to work in good faith with the loan’s servicers to determine the most effective path forward, which is expected to result in ultimate removal of these hotels from its portfolio.
“This past week we made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan,” commented Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer of Park. “After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market. Now more than ever, we believe San Francisco’s path to recovery remains clouded and elongated by major challenges – both old and new: record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar through 2027 that will negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future
(Excerpt) Read more at pkhotelsandresorts.com ...
Isn't Sanfransicko a paradise of liberal government?
Aaaaannnnnd the dominoes begin to fall.
Who owns that debt?
I wonder if they will “gift” the hotels to sanfransicko? Or will the city try to sue them?
The city will acquire them at fire-sale prices and fill ‘em with illegals.
That is the real question.
Let’s go Brandon!
Weakest euphemism I have seen.
“fill ‘em with illegals.”
The idiot mayor of new york wants people to open their homes to the illegals being sent their way.
This could all be fixed if every one of the 81,000,000 Democrats who voted for Biden would donate $10.
I’ve been waiting for real estate to implode. Starts in bad urban centers, but spreads everywhere: I think cities are done. Then the banks fold, then everything folds. The cause is different from 2008 but it might end up being worse over all.
Pension funds - whose retirees might find themselves waiting just a bit longer than they expected.
Hmmm, who would have thought that people wouldn’t want to stay in a hotel located in a legalized-crime zone?
It’s puzzling.
San Francisco recommends that convention attendees wear heavy leather hiking boots to protect themselves from bloody needles and human excrement in the streets.
They can’t. The debt owners get the property when they stop paying. Some legalities to actually foreclose but the debtors hood first position on thr property.
They may not want it.
There is more here than meets the eye. The loan matures in November 2023. So, the borrower is giving up the property for six months of mortgage payments. Unless there is a huge balloon payment they are giving up the building for very little money.
I suspect the real scenario is that a default and sale of the property will wipe out contracts that Park has with various unions and even with San Francisco. The loss on the building may be less than the projected losses from being forced to operate in a city that has turned itself into a sh*t hole.
In New York,it will be commercial real estate that fails..No one wants to go back to the office.....
There is a balloon it’s in the article. They are banking the 6 months of payments rather than paying only to have to refinance or surrender then
They are literally saying we are going to keep that 6 months of cash and give up completely on the property. Or basically “we feel the property is worth less than we owe and are keeping out cash.”
Therefore, you have this situation, and the ridiculous suggestion by the Mayor of New York that his flood of "migrants" be housed in private homes instead of trying a real-world solution like deportation, which would require an excruciating admission of error.
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