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A SF Hotel Owner just gave back the keys...and left over $850 million in equity on the table
I don’t have much more to say on this one beyond the article except to point out the math they leave out.
Virginia-based REIT Park Hotels & Resorts has opted to cease payments on a $725 million loan, as the SF Business Times reports today, essentially surrendering over 2,900 hotel rooms and hospitality facilities to its lender. This includes the 1,921-room Hilton San Francisco Union Square, which is San Francisco's largest hotel, occupying an entire city block, and one of the country's largest hotels outside of Las Vegas.
The combined value of the property is $1.56 billion which means…they are walking away from $835+ million in equity in the hotel.
That’s…insane. They literally don’t think paying down a $725 million loan is worth it anymore. Tells you what they think the property is worth.
It's a significant move that Park Hotels would walk away from debt that is less than half that amount
That’s putting it extremely mildly.
As an aside, I’ve considered starting an ETF that buys up credit default swaps on office buildings identified by AI that are likely to default. Let me know if you want in.