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Hotel Owners Start to Write Off San Francisco as Business Nosedives

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Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#51

Post by Panzer04 »

bombcar wrote: post #38
HWR_14 wrote: post #11

Forgive my redundant point being repeated from a few days ago: Park Hotels borrowed $725MM interest only and bought property. They haven't been building equity. I believe these mortgages are non-recourse (at worst they can foreclose, not go after you for any extra money). If the property is worth less than the note, there is no reason not to send in the keys. I've seen the same news in the past couple of months in ot…

A non-recourse loan means the lender is also “invested” in the property somewhat. That can be a good thing. A non-recourse interest only loan is a bit batshit however.

It's standard for corporate loans. The point of a loan is to pay interest for cash, and it's not really helpful outside of consumer lending to amortise the loan principle over the term rather than simply pay the full amount when due (usually funded by refinancing and simple cash on hand)

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#52

Post by nordsieck »

fallingknife wrote: post #29
jgalt212 wrote: post #28

Earlier quoted context omitted.

> They didn't "fail to repay." Nobody ever repays this type of loan. Largely, but not strictly true. When the property changes hands, the old loan is paid down by the original owner / creditor and a new loan is taken out by the new owner / creditor.

And when you pay off a loan with borrowed money the word for that is "refinance"

> And when you pay off a loan with borrowed money the word for that is "refinance"

Not really.

If I buy a house with a mortgage, I wouldn't say I refinanced the house just because the previous owners also had a mortgage. Refinance is only used when the owner is the same across loans.

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#53

Post by pixel3234 »

mc32 wrote: post #43
pixel3234 wrote: post #37

Town hall should house homeless in hotels as NYC and UK does. It would solve two problems and boost local economy!

Turning upscale hotels into SROs isn’t a way to regain valuation.

Not SROs! Hotels should be fully compensated at commercial rate! Maybe slight discount for long term stay could be negotiated. Even $500 per night would be cheaper than current policy!

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#54

Post by algo_trader »

smallerfish wrote: post #6

I happened to be digging around hotel trade publications yesterday (before deciding that the PMS space is a crowded mess with too many incumbents and a nightmare of necessary integrations), and found this, which may back up the article somewhat: > The steepest RevPAR declines were seen [for the last week in May] in San Francisco (-15.6% to US$108.49) and Orlando (-12.8% to US$109.48). https://www.hotel-online.com/pre…

Did you come across any data on (up to date) construction costs ?

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#55

Post by Fervicus »

ufo wrote: post #32
hef19898 wrote: post #24

Earlier quoted context omitted.

Banks loaned subprime mortgages, enough actually to tank the global economy. Banks loaned for Musk's Twitter purchase. Free money tends to move the risk assessment done by banks in not a good way. Just ask SVB.

FWIW, SVB didn't go broke because of subprime loans. They had a bank run.

They mismanaged their risk. You make it sound like they did nothing wrong.

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#56

Post by koolba »

bombcar wrote: post #38
HWR_14 wrote: post #11

Forgive my redundant point being repeated from a few days ago: Park Hotels borrowed $725MM interest only and bought property. They haven't been building equity. I believe these mortgages are non-recourse (at worst they can foreclose, not go after you for any extra money). If the property is worth less than the note, there is no reason not to send in the keys. I've seen the same news in the past couple of months in ot…

A non-recourse loan means the lender is also “invested” in the property somewhat. That can be a good thing. A non-recourse interest only loan is a bit batshit however.

> A non-recourse interest only loan is a bit batshit however.

Not as crazy as you think as that’s pretty much what the FHA does with consumer mortgages in non-recourse States. It’s not quite zero but I think it goes as low as 3.5% down.

You can almost create this position synthetically by getting a non-recourse loan for the bulk of the purchase, and an unsecured loan (at a higher rate) for what would normally be the down payment. You end up with two loans to repay, one of which is tied to the property and other purely to your good faith and credit. The latter would have a claim for non-repayment but it could be much smaller than the full property price and need not even be anything close to 20%.

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#57

Post by circlefavshape »

zoky wrote: post #22
prepend wrote: post #8

Earlier quoted context omitted.

> run down These aren’t run down hotels. These are both rated 4.2 [0, 1] and while aren’t the greatest in the world are both Hiltons and decent hotels. The criticism doesn’t change the nature of the original article in that San Francisco is less good as it once was and as a result businesses are defaulting on pretty big things rather than invest in keeping them up. The inaccurate language seems to have a “everything’…

The hotels may or may not be themselves run down, but there's also the neighborhood to consider, especially when you're talking about San Francisco. I know someone who used to travel to SF for work a lot, like 10-12 times a year. He had a favorite hotel there that was a block and a half away from his office. But every single time, he'd rent a car, just to drive from the underground parking at his hotel to the undergr…

Oh for goodness sake. He felt safer than when he was walking. Renting a car to drive a block and a half is just ridiculous - unless maybe he's displaying obvious signs of wealth?

I stayed in the hilton union square in Feb and yes there are a lot of homeless people and addicts around but none of them even looked at me crossways

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#58

Post by jojobas »

paulcole wrote: post #36
zoky wrote: post #22

Earlier quoted context omitted.

The hotels may or may not be themselves run down, but there's also the neighborhood to consider, especially when you're talking about San Francisco. I know someone who used to travel to SF for work a lot, like 10-12 times a year. He had a favorite hotel there that was a block and a half away from his office. But every single time, he'd rent a car, just to drive from the underground parking at his hotel to the undergr…

It likely felt safer than walking but there is a 0% chance that a 1.5 block walk through San Francisco was truly more dangerous than a 1.5 block car ride. It’s much more likely that neither was dangerous at all.

Feeling of danger is subjective, I can easily imagine a car ride along shit-infested sidewalks and deranged homeless people feels less dangerous (and icky) than walking.

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#59

Post by verelo »

paulcole wrote: post #36
zoky wrote: post #22

Earlier quoted context omitted.

The hotels may or may not be themselves run down, but there's also the neighborhood to consider, especially when you're talking about San Francisco. I know someone who used to travel to SF for work a lot, like 10-12 times a year. He had a favorite hotel there that was a block and a half away from his office. But every single time, he'd rent a car, just to drive from the underground parking at his hotel to the undergr…

It likely felt safer than walking but there is a 0% chance that a 1.5 block walk through San Francisco was truly more dangerous than a 1.5 block car ride. It’s much more likely that neither was dangerous at all.

I remember spending entire days walking the city. I walked from a VC meeting to a lunch with a friend, it took over an hour.

Having said that, a lot has changed since 2009

Re: Hotel Owners Start to Write Off San Francisco as Business Nosedives

#60

Post by [deleted] »

fallingknife wrote: post #29
jgalt212 wrote: post #28

Earlier quoted context omitted.

> They didn't "fail to repay." Nobody ever repays this type of loan. Largely, but not strictly true. When the property changes hands, the old loan is paid down by the original owner / creditor and a new loan is taken out by the new owner / creditor.

And when you pay off a loan with borrowed money the word for that is "refinance"

[deleted]
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