Atlas in the news

Crisis approaches as loans mature and tourism rebound lags. JUN 9, 2023, 3:43 PMBy Pawan Naidu San Francisco hotels are approaching a debt crisis as many properties struggle to meet their loan service payments and higher interest rates make refinancing too expensive. According to a report by Trepp, 89 percent of lodging CMBS loans in the city have debt service coverage ratios of less than 1.25, meaning the hotels are barely making enough to cover their monthly loan payments. The largest of these loans were for Park Hotels and Resorts’ two-asset portfolio of Hilton Union Square and Parc 55. The company announced this week that it will cease making payments this month and the $725 million loan will be delinquent in July. The loan is set to mature in November and has an interest rate of 4.11 percent, according to data collected by Morningstar. Other large loans that are set to mature soon are for the Hilton Financial District hotel with a current balance of $87.5 million and The Four Points by Sheraton with a balance of $11 million. They respectively have interest rates of 5.28  and 4.14 percent, and mature in November and October of next year.  “You have an interest rate environment now…

Arnault’s LVMH Says It Appears To Lack Votes for Cheval Blanc Hotel Construction Outside Los Angeles By Jack WitthausCoStar News May 30, 2023 | 1:38 P.M. A proposed luxury hotel appears to have been shot down by voters in Beverly Hills, California, after voters concerned about development and unions prevailed against the world’s richest person in a vote that is seen as having a potentially chilling effect on developers considering future hospitality investment in the city. French luxury conglomerate LVMH said in a statement late Friday its effort appeared to have fallen short by a narrow margin to allow the company to redevelop a former Brooks Brothers into a 109-room Cheval Blanc hotel at 468 N. Rodeo Drive along the world famous retail corridor. LVMH was down more than 120 votes, according to the Los Angeles County Registrar-Recorder/County Clerk on Tuesday. The election is expected to be certified Friday. LVMH’s founder, chairman and reported owner of about half the company is Bernard Arnault, who Forbes and Bloomberg have ranked as the world’s richest person. A spokesperson for LVMH said in the statement it won’t bring the hotel project back in any form if the final vote rejects the development. The project went through a two-and-a-half…

This is part of San Manuel’s diversification away from its legacy business, the Yaamava’ Resort & Casino at San Manuel. By JONATHAN LANSNER | jlansner@scng.com | Orange County RegisterPUBLISHED: June 5, 2023 at 10:23 a.m. | UPDATED: June 5, 2023 at 6:00 p.m. The San Manuel Band of Mission Indians, owners of the Yaamava’ casino and hotel in Highland, are gambling on the high-stakes Orange County luxury resort market. San Manuel announced Monday, June 5, that it bought a 40% stake in the Waldorf Astoria Monarch Beach Resort & Club in Dana Point. The 400-room, five-diamond hotel campus sits across the Pacific Coast Highway from the ocean on 162 acres. The tribe is partnering with Ohana Real Estate Investors, which paid $497 million for the resort in Dana Point in 2020. The property includes a six-acre private beach club, three swimming pools, and its own 18-hole golf course. Ohana and San Manuel did not disclose the dollar amount of the investment but noted the tribe has “the option to increase its ownership through one or more future transactions.” The complicated history of the Dana Point resort highlights the gyrations of the luxury resort business. It opened in 2001 under the St. Regis hotel chain, and after several ownership…

By Alex Barreira  –  Staff Reporter, San Francisco Business TimesJun 5, 2023 Updated Jun 5, 2023, 5:25pm PDT The expected ownership change of the Hilton San Francisco Union Square and Parc 55 hotels could play a significant role in shifting local hotel market dynamics for the near term, arriving on the heels of several other debt-impacted hotel dispositions. The expression of diminished confidence by owner Park Hotels & Resorts — which said Monday it would stop payments on a loan behind the hotels, and work out an arrangement with the lender that it expects will remove the two large hotel properties from its portfolio — is likely to weigh on investors, experts said. It could become the latest notable instance of debt-saddled hotels hitting the market in San Francisco, following the recent sale of Nob Hill’s luxury Huntington Hotel and marketing of the defaulted Standford Court Hotel. It sets the stage for a a drop in San Francisco’s typically sturdier key prices. The Hilton and Parc 55 were valued at a combined $1.56 billion in an appraisal at the time of the loan underwriting in 2016, according to a CMBS industry report on the loan for bond investors. Should the outcome of the negotiations be Park (NYSE: PK)…

By: Roland Li | June 7, 2023 Park Hotels & Resorts’ plan to surrender ownership of two of San Francisco’s biggest hotels reflects the city’s slow tourism recovery and the widening financial distress hitting local property owners. The company plans to give up nearly 3,000 hotel rooms in the Hilton San Francisco Union Square and Parc 55 properties. Its expected $725 million loan default appears to be the largest U.S. hotel default during the pandemic. Though unmatched in size, Park Hotels is far from alone. Other San Francisco hotels such as the Huntington on Nob Hill and Yotel on Market Street were recently sold in foreclosure auctions. And more than 30 additional San Francisco hotels are facing loans due in the next two years, said Emmy Hise, senior director of hospitality analytics at CoStar, a real estate data firm. San Francisco has one of the slowest pandemic recoveries in the country, and its daily room rate of $234 in the past year is below 2019 levels, Hise said. Every other U.S. market is above 2019 levels, in part because of inflation. The city’s highest-spending leisure tourists were from China, and those travelers were barred from returning until the Chinese government ended its strict border policies earlier this year….

Park Hotels and Resorts has ceased payments on a $725m loan on its San Francisco properties, including the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco. The company is expected to give the two hotels back to its lender. The decision is a major disinvestment for the city’s hospitality market, which was once one of the strongest in the US. By Madeline Beaumont Park Hotels and Resorts has ceased payments on a $725m loan on its San Francisco properties, including the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco. The company is expected to give the two hotels back to its lender. The decision is a major disinvestment for the city’s hospitality market, which was once one of the strongest in the US. The two hotels make up around 9% of the city’s total stock of hotel rooms. The move could be among the first in a line of dominos to fall in San Francisco’s hotel market, As reported in hotel consulting firm Atlas Hospitality Group. As reported in the SF Standard, Park Hotels and Resorts, a real estate investment firm based in Virginia, has announced that it has ceased…

Tribe behind Yaamava’ Casino owns 40% of Waldorf Astoria Monarch Beach Resort JUN 7, 2023, 11:30 AM | By TRD Staff An Indian tribe in the Inland Empire has bought a major stake in the Waldorf Astoria Monarch Beach Resort & Club in Dana Point. The San Manuel Band of Mission Indians, owners of the Yaamava’ Resort & Casino in Highland, has taken a 40-percent stake in the 175-acre resort at 1 Monarch Beach Resort, the Orange County Register reported. The San Manuel Band paid an undisclosed sum to Ohana Real Estate Investors, based in Redwood City, which in 2020 bought the 400-room, five-diamond hotel campus for $497 million. “We are impressed with Hilton and Waldorf Astoria’s strategic repositioning of the property over recent years,” San Manuel Chairwoman Lynn “Nay” Valbuena told the Register. The Mission-style hotel, once known as Monarch Beach Resort, sits atop a 150-foot bluff on the inland side of Pacific Coast Highway, overlooking the ocean. The property includes a 6-acre private beach club, three swimming pools and an 18-hole golf course. Ohana and San Manuel did not disclose the dollar amount of the investment, but noted the tribe has “the option to increase its ownership through one or…

If Approved, LVMH’s Proposed Cheval Blanc Hotel Would Attract Guests With Rodeo Drive Site, Analyst Says By Jack WitthausCoStar NewsMay 19, 2023 | 3:49 P.M. A proposed luxury hotel in affluent Beverly Hills, California, would attempt to lure guests to an area that’s considered underserved for hospitality — as long as residents vote to support the project. French luxury conglomerate LVMH needs to win a special election on May 23 on whether it can proceed with redeveloping a former Brooks Brothers at 468 N. Rodeo Drive into a 109-room Cheval Blanc hotel. LVMH’s founder, chairman and reported owner of about half the company is Bernard Arnault, who Forbes and Bloomberg have ranked as the world’s richest person. Beverly Hills is among the strongest hotel markets in Los Angeles and generates some of the highest rates in the city because of its famous shopping, relative lack of hotel competition and tourist attractions, said Alan Reay, president of Irvine-based hospitality brokerage Atlas Hospitality Group. Adding to the hotel’s appeal is its location on Rodeo Drive, one of the world’s most valuable shopping districts. The Hollywood-Beverly Hills hotel market has an average daily rate of $348.82, well above the greater L.A. average of $199.18, according to CoStar data. “It would phenomenally successful,” Reay said…

Written by Kevin TruongUpdated at Jun. 05, 2023 • 12:36pmPublished Jun. 05, 2023 • 12:07pm Park Hotels and Resorts, a Virginia-based real estate investment firm, said Monday that it had stopped paying back a $725 million loan on its main San Francisco properties and is likely to give two of the largest hotels in the city back to its lender. The decision to offload the city’s largest hotel—the 1,921-room Hilton San Francisco Union Square—as well as its fourth-largest hotel—the nearby 1,024-room Parc 55 San Francisco—represents a major disinvestment and negative sign for what was once one of the strongest hospitality markets in the country. Taken together, the two properties make up around 9% of the city’s total stock of hotel rooms. Park Hotels announced that it had stopped making payments on the loan, which has a November 2023 maturity date. In an earnings call earlier this month, Park Hotels CEO Thomas J. Baltimore Jr. said that the company expected to have the situation resolved by summer. Alan Reay, president of hotel consulting firm Atlas Hospitality Group, said some hotels are facing headwinds similar to San Francisco’s office market, which is seeing record-high vacancies.  “You tend to see issues, particularly in large, full-service hotels that have been…

Park Hotels and Resorts will cease servicing $725M debt in “best interest” of investors JUN 5, 2023, 5:39 PMBy Pawan Naidu Park Hotels and Resorts announced it will cease making payments toward a $725 million non-recourse CMBS loan which is scheduled to mature in November 2023.  The loan was secured by two of its San Francisco hotels — the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco. “After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market,” CEO Thomas Baltimore Jr. said in a statement. “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. Unfortunately, the continued burden on our operating results and balance sheet is too significant to warrant continuing to subsidize and own these assets.” The interest-only…

Recovery in San Jose badly trails other Western cities By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News GroupPUBLISHED: May 22, 2023 at 5:30 a.m. | UPDATED: May 22, 2023 at 3:50 p.m. The Bay Area’s hotel industry is still struggling to rebound from coronavirus-linked shutdowns, even as the lodging sector outside the region has flourished. And not everyone is in agreement about what’s to blame. San Jose’s core hotel markets have been far slower to recover financially from the pandemic than those in other major city centers in the western United States. Hotel revenues in San Francisco and Oakland also remain sluggish. Downtown San Jose ranked dead last in the peer group of 14 markets in terms of its recovery, according to information that STR, which analyzes the hospitality market, provided to this news organization. San Jose’s airport area was nearly as feeble. “San Jose has a heavy reliance on high-tech business travel, which has not rebounded post-COVID,” said Alan Reay, president of Atlas Hospitality Group, which tracks the lodging sector. Together, San Jose’s hotel markets downtown and near the airport generated revenues in 2022 that were 45% below the 2019 total, before the pandemic began. Downtown San Jose’s hotel market alone was even worse, generating…

Opinions Vary on Impact of Banks Collapsing PACE Financing an Opportunity for Some LOS ANGELES — The state of the financial markets and lending have been hot-button topics in the hospitality industry after three regional U.S. banks collapsed over the past three months. Lenders and hospitality executives at the 2023 Meet the Money national hotel finance and investment conference commented on the current state of the banking crisis: Ash Patel, president and CEO, Commercial Bank of California This current crisis has nothing to do with the credit crisis yet. And I use the word yet because this current crisis is a crisis of confidence. … None of our pencils are up because we’re not facing one of the previous crises that we went through. This is a very unique crisis. This crisis only happened in 1907 when [banks] went bankrupt, and since then, and through the last 50 years, we have not heard of a bank that failed because there was a bankruptcy, meaning the depositor lost confidence in the viability of a particular bank. That’s why all of us on the table here are still continuing to lend. Alan Reay, president, Atlas Hospitality Group Depending on what the regulators…