Two years after a major hotel operator walked away from a multibillion-dollar investment in San Francisco, leaving two of the city’s largest hotels in limbo, a trio of New York-based firms is stepping in to take over.
Newbond Holdings, the Witkoff Group, and Conversant Capital have agreed to purchase the Hilton San Francisco Union Square and Parc 55 hotels, according to court documents reviewed by The Standard. The two properties, which together comprise nearly 3,000 rooms, have been under the control of a court-appointed receiver since their previous owner, Park Hotels & Resorts, defaulted on a $725 million loan in 2023.
Park Hotels, a Virginia-based real estate investment trust, acquired the Hilton in 2000 and Parc 55 in 2015. The company took out the massive loan in 2016 to fund renovations, but ultimately ceased payments and relinquished control of the properties amid financial struggles.
The sale is still subject to court approval. According to filings, a preferred buyer was selected in March, but the closing has been delayed four times due to the size and complexity of the transaction.
Though the purchase price has not been disclosed, a July bondholder report indicated that any deal would require the buyer to assume and restructure the distressed $725 million commercial mortgage-backed securities loan. The new owners must also inject capital to address cash flow issues and complete renovations to boost the hotels’ value.
In 2016, the two hotels were appraised at $1.56 billion. That figure has since plummeted, with the most recent bondholder report estimating their combined value at between $450 million and $500 million.
Both hotels will continue to be operated by Hilton through at least 2040, with options to extend the management agreement for decades beyond.
Newbond Holdings is a real estate investment firm focused on hospitality, with more than $20 billion in investments across properties like the Westin Tampa Waterside and Renaissance Times Square. The Witkoff Group, founded in 1997 by Steven Witkoff, is a prominent Manhattan developer known for acquiring high-profile assets. Witkoff was recently appointed U.S. special envoy to the Middle East. Conversant Capital, founded in 2020, specializes in flexible capital solutions for unconventional and evolving real estate opportunities.
The San Francisco Chronicle was first to report the identities of the buyers.
Source: sfstandard.com