By Will Feuer
Park Hotels & Resorts said it has ceased making payments toward a $725 million commercial mortgage loan that is secured by two of its hotels in San Francisco.
"We believe it is in the best interest for Park's stockholders to materially reduce our current exposure to the San Francisco market," Chief Executive Tom Baltimore said.
"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," he said.
The real-estate investment trust said the commercial mortgage-backed securities, or CMBS, loan was scheduled to mature in November 2023. It is secured by the REIT's 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco properties.
Park Hotels said removing the loan and the hotels will improve its balance sheet and operating metrics.
Write to Will Feuer at Will.Feuer@wsj.com
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