Highgate hands back keys in San Francisco

SAN FRANCISCO — New York City-based Highgate has handed back the keys to the lender for the 686-key Hyatt Regency San Francisco Downtown SoMa as it joins several other hotels in the city with lending issues.

Earlier this year, Highgate missed a $250 million balloon payment on an interest-only loan to lender Blackstone Mortgage Trust. The cost of the debt at the time of this month’s deed-in-lieu totaled more than $290 million, according to the San Francisco Business Times.

Highgate acquired the 36-story hotel, which is reported to be the sixth largest in San Francisco, in 2018 for $315 million when it was known as the Park Central. The hotel had more than $50 million in renovations before it was rebranded to a Hyatt Regency in 2022.

According to a story in ALM/Globest.com, hotel bookings linked to events at the Moscone Center, the largest conversion and exhibition complex in San Francisco, have plummeted from nearly 800,000 room nights before COVID to about 400,000 in 2024.

San Francisco’s population declined by nearly 34,000 residents over the past five years, which ranks it among the four top counties in the country with the largest decline, according to new U.S. Census Bureau estimates.

The hotel is just the latest in a string of high-profile hotels in San Francisco to fall into financial trouble after COVID and remote work have emptied the city’s downtown, and the metropolitan area continues to lose its population.

In July, a judge extended until March 2025 the deadline for selling two of the city’s largest hotels, the 1,919-key Hilton San Francisco Union Square and the adjacent 1,023-key Hilton Parc 55. Tysons, Virginia-based Park Hotel & Resorts handed the hotels back to the lender in 2023 as the maturity approached on a $725 million CMBS loan from JPMorgan Chase.

In May, JLL was tasked with marketing a loan backed by the Four Seasons San Francisco at Embarcadero. Palm Beach Gardens, Florida-based Westbrook Partners acquired the luxury hotel in 2019 for $127 million but stopped making payments on the loan and was served a notice of default a few months earlier.