Two San Francisco Hiltons Add to Woes of Commercial Mortgage-Backed Securities. Special Servicing Rate of Hotel CMBS Spiked to 26% | Wolf Street

Two Hilton hotel properties in San Francisco – the Hilton San Francisco Union Square, the Bay Area’s largest hotel with 1,921 rooms, and the Hilton Parc 55, both in the Union Square area – owned by hotel-REIT, Park Hotels & Resorts [PK], have now been added to the huge pile of hotel properties seeking relief on their mortgages that have been packaged into mortgage-backed securities (CMBS). Both hotels are still closed, though some other hotels in San Francisco have reopened.

Tourism remains a small fraction of its former glory. Leisure tourism, which has come back a smidgen from near zero, is only part of the problem for these hotels.

Convention tourism is a huge factor in San Francisco, and all in-person conventions and meetings have been cancelled or converted to virtual events, including at the vast Moscone Convention Center. People on expense accounts are not coming to the City to go to conventions. And the Hilton San Francisco Union Square is the City’s largest convention hotel, with 134,500 square feet of meeting space, ballrooms, and meeting rooms.

This Special Servicing rate for hotel properties spiked to a record of 26.0% at the end of September, according to Trepp, in its October report on CMBS.

Two San Francisco Hiltons Add to Woes of Commercial Mortgage-Backed Securities. Special Servicing Rate of Hotel CMBS Spiked to 26% | Wolf Street