Owner Walks Away From $725 Million San Francisco Hilton. Meanwhile, Westfield Puts a San Francisco Mall Into Receivership So They Can Walk Away

In unrelated developments, Westfield Shopping Centers has announced it will ditch a mall in Downtown San Francisco. This, a week after Hilton Hotels successor said it was walking away from the City's largest hotel and its 4th largest hotel by room numbers, so that it won't have to make payments on a $725 million debt.

Both companies cited San Francisco's abysmal security situation. Homeless people cover San Francisco like zombies, and no part of town is safe from crime. For its part, Westfield says the shoppers never came back to San Francisco after the pandemic (though its San Jose property did come back). Westfield will walk away from a $558 million loan.

Park Hotels and Resorts (an investment trust spun off from Hilton Worldwide in 2017) surrendered the building and the nearby Parc 55 San Francisco to its lender JPMorgan Chase, citing San Francisco's "record high office vacancy; concerns over street conditions; lower return to office than peer cities; and a weaker than expected citywide convention calendar."

The investment firm that owns Hilton San Francisco Union Square and Parc 55 hotels is walking away from its debt and surrendering them to its lender. Park Hotels & Resorts has opted to cease payments on a $725 million loan, according to the press release.

The Hilton San Francisco Union Square is a skyscraper hotel located several blocks south-west of Union Square in San Francisco, California. Opened in 1964, the innovative 18-story, 1200-room original building was known as a "motel within a hotel", allowing guests to park directly next to their upper-story rooms.

Meanwhile, the SF Chronicle reports that "Westfield is giving up its namesake San Francisco mall in the wake of Nordstrom’s planned closure, surrendering the city’s biggest shopping center to its lender after foot traffic and sales plunged during the pandemic."

"The company stopped making payments on a $558 million loan, and Westfield and its partner, Brookfield Properties, started the process of transferring control of the mall at 865 Market St. this month."

“For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property. Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward,” the company said.

Nordstrom, which occupies 312,000 square feet in the mall, is closing in August after 35 years when its lease expires. The mall — which includes 1.2 million square feet of retail space and 300,000 square feet of offices — will be only 55% leased after Nordstrom’s departure, far below other U.S. Westfield malls that are, on average, 93% leased.