1/26/2024 0 Comments Boxer property management tulsaIn 2013, Blackstone began to unload its Hilton stake via IPO, ultimately at a huge profit. In 2007, Hilton was taken private in a huge leveraged buyout (LBO) by PE firm Blackstone. Park Hotels was spun off from Hilton Hotels. But Park Hotels is screwing your bond mutual fund and pension fund. This default has no impact on San Francisco. The hotels themselves are operated by other companies, and when Park Hotel defaults on a mortgage and walks away from the property, it means ownership of the property will change. That’s why interest-only mortgages rolled into CMBS are toxic. And getting a new 7% mortgage to pay off the old 4.1% mortgage wouldn’t work out at all. But by the time it matured, interest rates on these types of high-risk commercial mortgages were already over 7%. The mortgage had an interest rate of 4.1%. So in November 2022, Park Hotels was supposed to pay off the $725 million mortgage but obviously didn’t have the cash. These other people whose money this was are now getting screwed, and they likely don’t even know about it. The slices were sold to bond mutual funds, pension funds, etc., that manage other people’s money. So, JPMorgan sliced and diced the mortgage and securitized it into CMBS, to where the top-rated slices were well into investment grade. But no bank would ever want that kind of toxic mortgage on its books, that interest-only, non-recourse commercial mortgage, backed by fantasy valuations of some old towers. Park Hotels refinanced the properties in 2016, during the era of free money, with a high-risk interest-only non-recourse 4.1% mortgage of $725 million, backed by fantasy valuations of these decades-old run-down properties of $1.02 billion and $540 million respectively.īanks hang on to their low-risk high-quality loans. Their towers were built in the 1960s through 1980s and need an estimated $200 million in upgrades and renovations. The mortgage was secured by two run-down mega-hotels in San Francisco, the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco. Park Hotels failed to pay off a $725 million interest-only non-recourse mortgage that matured last November. Its shares have collapsed by 59% from the high, and by 54% from the IPO in 2017, after it slashed its dividends multiple times and lost $1.9 billion in 20, far more than it had ever made as a public company.Īnd after ripping off its shareholders, Park Hotels is now ripping off bond mutual funds and pension funds that bought the commercial mortgage-backed securities (CMBS) backed by the mortgage that it defaulted on, and after ripping off all its investors to the tune of billions of dollars, it blamed in a ridiculous press release on June 5 the “street conditions” and high vacancy rates in San Francisco? It doesn’t operate the hotels, other companies do that. City’s lodging business has been squeezed by crime and other quality-of-life issues.”Īs her core example, she regurgitated a clickbait story engineered via press release by Park Hotels & Resorts, a publicly traded REIT that owns a bunch of decades-old overleveraged hotel properties. WSJ: “Hotel Owners Start to Write Off San Francisco as Business Nosedives. The Wall Street Journal managed to publish another stupid article this morning with a clickbait headline and subtitle about hotels in San Francisco, concocted by a young clueless reporter who lives on the other side of the country and got her notions about San Francisco from reading what exactly? That kind of BS article doesn’t belong in the WSJ. The clueless WSJ reporter needs to be taken to the woodshed.
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