Post-pandemic, we’ve seen quite an uneven recovery in the hotel industry. Leisure oriented properties have largely been doing incredibly well, with record rates and occupancy, while many business oriented properties have struggled.
San Francisco is probably the major US city that has been in the toughest position, given how heavily reliant the city was on convention business before the pandemic, but that hasn’t fully returned. In 2023, we saw the owners of San Francisco’s biggest hotel default on their loan. Now the owner of one of San Francisco’s best hotels appears to be doing the same, as flagged by View from the Wing.
In this post:
San Francisco Four Seasons owner stops making loan payments
It’s being reported that the owner of the 155-room Four Seasons San Francisco at Embarcadero has stopped making debt payments on the property. In 2019, Florida-based real estate investment firm Westbrook Partners purchased the property for $126.6 million, and turned it into a Four Seasons.
The company took out a $72.5 million loan on the property, which it has now defaulted on. Payments haven’t been made since December 2023, and they’re now $3.15 million behind on their payments, according to a March 3 notice of default.
This notice of default gives the owners another 90 days to pay up, or else the property could be foreclosed on. Now, it’s possible that this is some sort of a negotiating tactic, and that the owners come to an agreement with lenders. Then again, this would hardly be the first San Francisco hotel that’s foreclosed on.
Just for some background, the Four Seasons Embarcadero is located within the 48-story 345 California Center building, and the hotel takes up the top several floors of the building. The hotel opened as a Four Seasons in 2019, then closed at the start of the pandemic, and then reopened again in 2021.
The property had quite a history even prior to that. It first opened in 1986 as a Mandarin Oriental. Then in 2015 it was sold, and became the Lowes Regency San Francisco. Then it was sold again, leading to the Four Seasons branding.
The Four Seasons Embarcadero is a great hotel with excellent service and breathtaking views, so I’m sad to see what’s happening there.
San Francisco hotels are in a tough spot
San Francisco has no doubt had some major struggles in recent years, with several factors at play. San Francisco has long been the place for tech people to be, and the pricing for everything reflected that. Add in that the city was popular with conventions, and it was a very lucrative market for hotel owners.
Unfortunately for San Francisco, a lot has changed. With more people working from home, some companies having left the Bay Area, business travel being down, and convention traffic not having returned to pre-pandemic levels, the demand for hotels in San Francisco continues to be greatly depressed, with no signs of that changing.
For hotel owners, that presents a real challenge. They can’t charge the rates they used to charge, and even with lower rates, occupancy is way down. Many hotel investors seemingly thought that prices in San Francisco would only keep going up, and many bought at the height of the market. In the case of the Four Seasons, buying a property in 2019 in San Francisco is possibly the worst timing imaginable.
Bottom line
The Four Seasons San Francisco at Embarcadero is facing a foreclosure. The hotel was purchased in 2019 for $126.6 million, and the owner is now several months behind on a $72.5 million. Within a few months we should learn what the future holds for this property. It’s really sad what has become of the San Francisco hotel market…
What do you make of the situation at the Four Seasons San Francisco at Embarcadero?
I currently live in San Francisco and I live in Noe Valley, I have for the past 10 years. San Francisco did have a hard time during COVID. Is San Francisco the dirtiest and grimiest city I have ever lived in?, yes it is. But have I ever felt unsafe in the city ever, NO. As long as you stay away from hotspots, such as the Tenderloin, Western Addition, SOMA and Inner Mission at night...
I currently live in San Francisco and I live in Noe Valley, I have for the past 10 years. San Francisco did have a hard time during COVID. Is San Francisco the dirtiest and grimiest city I have ever lived in?, yes it is. But have I ever felt unsafe in the city ever, NO. As long as you stay away from hotspots, such as the Tenderloin, Western Addition, SOMA and Inner Mission at night time. During the day, these places have no problems at all, no one is going to bother you, they just want their drugs and or alcohol and to be left alone but at night time, you don't want to go through them on certain streets. Just like in LA, NYC, Chicago, Dallas, Houston, New Orleans, Boston, DC, Miami, St Louis, Cleveland, Denver, Las Vegas, etc...
We just had tne GDC here in San Francisco, there were over 30,000 attendees. Downtown was packed and lively. The bar at the Four Seasons was as packed as I have ever see it. Don't believe anything that anyone who currently doesn't live in the city has to say about San Francisco. Even the person that said that Noe Valley was scary, what the hell are they even talking about, we have exactly 4 homeless people in neighborhood and none of them have ever acted aggressively to anyone ever. I have walked back home from bars on Market St and in the Castro and Mission at 2am and I have never had an incident ever. And trust me, I have walked home with more than a few beers in my system.
San Francisco is turning the corner and cleaning it's act up and in 3-5 years, it should be back and better than ever. Just have common sense when you are here, as the income inequality is the greatest in the US. Don't leave anything in your car, rental or otherwise. Don't flash high end jewelry or watches in public. And know your surroundings at all times. It is basic city living rules. Enjoy your time in the most beautiful city in the US and enjoy everything this city has to give you and the surrounding area also!
"San Francisco has no doubt had some major struggles in recent years" --- Understatement of the century!
Sky high prices and crime combined with widespread homelessness/junkies and the necessity of a "human feces map" tells you everything you need to know. SF was a beautiful city which has run into the ground by "progressive" policies.
MAGA asshole.
We like to go to San Francisco for occasional weekend staycations. The few blocks around the tenderloin are not the place to be, they never were and got worse recently.
On the bright side, 5-star hotels were never as affordable as they are now. Most areas in the city are just fine.
LOL...Well it is to be expected. Interesting that many reasons were provided here except the biggest one! Open Drug use and Homelessness taking over the town. Conventions are not coming back due to this which is sad as SF was one of my favorite business destinations to travel to. However bigger yet is that tourist travel has not slowed down however has in SF...Hummm could it be due to what vacationers incur on a vacation...
LOL...Well it is to be expected. Interesting that many reasons were provided here except the biggest one! Open Drug use and Homelessness taking over the town. Conventions are not coming back due to this which is sad as SF was one of my favorite business destinations to travel to. However bigger yet is that tourist travel has not slowed down however has in SF...Hummm could it be due to what vacationers incur on a vacation there today. Of course! Don't look for SF to be back anytime soon until the streets are cleaned up and the city is safe again.
On the tech/work-from-home issue:
Less than 10% of San Francisco works in tech. SF's association to tech is synecdoche. All the giants are down south in the Peninsula--the SF Bay Area. Facebook, Google, and Apple all fit this bill. Salesforce is the only big tech company with a bona fide HQ in SF proper, and let's face it, they're not Facebook/Google/Apple caliber. A decade or two ago, SF was a hotbed of fly by night...
On the tech/work-from-home issue:
Less than 10% of San Francisco works in tech. SF's association to tech is synecdoche. All the giants are down south in the Peninsula--the SF Bay Area. Facebook, Google, and Apple all fit this bill. Salesforce is the only big tech company with a bona fide HQ in SF proper, and let's face it, they're not Facebook/Google/Apple caliber. A decade or two ago, SF was a hotbed of fly by night startups, but even still, made up a very small percentage of SF overall.
WFH has been dialed way back. Fully remote jobs in tech are few and far between.
So which city to eventually financially falter, NYC, SF ?
This is not my thought. NYC and SF are lovely cities.
These are facts and firms are losing millions. And it is sad.
Whether crime is an issue or not, many conventions are avoiding big cities - like Seattle, Portland, San Fran, Chicago, NY etc. A friend recently just walked out a restaurant in San Fran and was robbed. It is not a crime is you steal less than $1000.
Of course it is a crime. Whether you're prosecuted is another matter.
LOWES Regency? LOL
Sf always had a homeless problems even back in early 2010s but it was brushed aside because people were busy making tech money. Now that sf is the capital of work from home in US, there are a lot less people to “dilute” out homeless population. Thus all of a sudden, SF is perceived having this huge homeless problem. The truth is it had always been there like many major cities in US. When SF...
Sf always had a homeless problems even back in early 2010s but it was brushed aside because people were busy making tech money. Now that sf is the capital of work from home in US, there are a lot less people to “dilute” out homeless population. Thus all of a sudden, SF is perceived having this huge homeless problem. The truth is it had always been there like many major cities in US. When SF starts to get people return to office, this problem will again fade away. Same with retail stores closings. They are closing because people are working from home (lack of foot traffic) not to mention the habit of Covid days when people shopping everything online had lasted post pandemic. SF will recover but it’s going to take 5-10 years and not a quick V-shape recovery that many hope for. In the mean time, gridlock traffic is a thing of the past. At least for few more years anyways. So that’s a good thing.
Stop gaslighting. I've been in the bay area since mid 2000's, and SF has changed drastically, and well before covid. Sure there were always homeless and panhandlers even in 2005, but there were no tents on sidewalks, and it was safe to walk around. Now the city is completely overrun. It has nothing to do with covid or conventions (thats an effect, not the cause), it has to do with the local government (and people...
Stop gaslighting. I've been in the bay area since mid 2000's, and SF has changed drastically, and well before covid. Sure there were always homeless and panhandlers even in 2005, but there were no tents on sidewalks, and it was safe to walk around. Now the city is completely overrun. It has nothing to do with covid or conventions (thats an effect, not the cause), it has to do with the local government (and people who voted for them) choosing to not enforce the law regarding homeless encampments, open air drug markets, public drug use, property crime, and now violent crime. This is what SF voters asked for, so enjoy your turd sandwich. I don't go into the city anymore, and nobody I know does either. It's just not worth the risk of getting your car broken into, mugged, assaulted, or stepping in a pile of human shit. It's a shame, because SF used to be where everyone wanted to be.
SF won't recover until voters decide enough is enough, but the SF voting public are delusional leftists, so it's not gonna happen anytime soon.
@Mantis, I have been living in the Bay Area and SF much longer than you have. You are the MAGA gaslight. Take a hike. I know about SF more than you do. You don't live in SF. I've seen all the changes SF had been and still going through. Your MAGA lies are what's wrong with this country. Maybe you want to consider moving to Miami since Calif doesn't jive with your kind and enjoy...
@Mantis, I have been living in the Bay Area and SF much longer than you have. You are the MAGA gaslight. Take a hike. I know about SF more than you do. You don't live in SF. I've seen all the changes SF had been and still going through. Your MAGA lies are what's wrong with this country. Maybe you want to consider moving to Miami since Calif doesn't jive with your kind and enjoy the high insurance rate and global warming effect since you are the type who doesn't believe in global warming anyways. You can enjoy your turd sandwich there along with that orange blob.
This ^^^ is the truth. It may be hard to hear. Back in the early 90’s we would spend our yearly vacation in sf (for 10+ yrs) and absolutely loved it! We hadn't been back for several years when we returned for a wedding 2 yrs ago. OMG! What a disaster area. It’s the local governing bodies that has destroyed a once jem of the world. Sad, but avoidable
Totally agree. It's the city politics that created this mess. I lived in SF from 94 thru 2003 and still visit almost every year. My visit last April was sad at what was once a vibrant city. BTW, I lived on the edge of respectability in upper Tenderloin my first year. We had bums, hookers and druggies but it was nothing like the magnitude I witnessed last year in what was a decent part of...
Totally agree. It's the city politics that created this mess. I lived in SF from 94 thru 2003 and still visit almost every year. My visit last April was sad at what was once a vibrant city. BTW, I lived on the edge of respectability in upper Tenderloin my first year. We had bums, hookers and druggies but it was nothing like the magnitude I witnessed last year in what was a decent part of Nob Hill downtown. And even visiting friends in Noe Valley was a bit sketchy. It used to be so quaint and actually a quiet city in the 90s with a few exceptions.
I was just in SF earlier this month. First time since 2017. I never believed the media portrayal of how bad it was, nonetheless I was unprepared for just how far from the reality the media and MAGA portrayal actually is. The burning desire by so many people in this country to evaluate everything from the perspective of political allegiance and political identity is overshadowing just everything positive that actually happens. But then again, a...
I was just in SF earlier this month. First time since 2017. I never believed the media portrayal of how bad it was, nonetheless I was unprepared for just how far from the reality the media and MAGA portrayal actually is. The burning desire by so many people in this country to evaluate everything from the perspective of political allegiance and political identity is overshadowing just everything positive that actually happens. But then again, a lot of people are making a lot of money from the endless division and rage, so it's not going to stop. The business that is 24/7 political rage never existed until 24 hours news and social media came along, hopefully those consumed by it will eventually make the mental connection between the hatred that they've developed for their fellow citizens and the money being made by the media and social networks.
Exactly!! ppl are making money from this divide on both sides. Some have made their careers all about EDI others are making money from MAGA
Thank you Ben for a much more reasoned and logical post compared to Gary's nonsensical bullsh!t. I live in San Francisco and have seen first hand the improvements in management in homeless, crime, open drug use, etc. What many people don't realize is this loan default has WAY MORE to do with the commercial real estate business than monthly cash flows and occupancy rates. These properties are highly leveraged with sketchy loan terms. The commercial...
Thank you Ben for a much more reasoned and logical post compared to Gary's nonsensical bullsh!t. I live in San Francisco and have seen first hand the improvements in management in homeless, crime, open drug use, etc. What many people don't realize is this loan default has WAY MORE to do with the commercial real estate business than monthly cash flows and occupancy rates. These properties are highly leveraged with sketchy loan terms. The commercial real estate world is HURTING big time. Reduction of conferences and business travel is of course a huge factor, but it's not the only reason for this loan default. Folks need to open their eyes and realize these are complex, multi-faceted issues without relying on their reactionary gut feelings (which are most often totally wrong).
I was in SF last week for work and stayed for the weekend. Compared to Dec 2021 when I was last downtown, the city has really cleaned up. Yes, there are still homeless around Union Square/Tenderloin/CityHall but they have always been there.
The city was full of people/tourists (Cable cars, Union Square, Ferry Building) which was refreshing to see. Restaurants were full every night. The hybrid model and big tech layoff does mean less...
I was in SF last week for work and stayed for the weekend. Compared to Dec 2021 when I was last downtown, the city has really cleaned up. Yes, there are still homeless around Union Square/Tenderloin/CityHall but they have always been there.
The city was full of people/tourists (Cable cars, Union Square, Ferry Building) which was refreshing to see. Restaurants were full every night. The hybrid model and big tech layoff does mean less foot traffic in the embarcadero area during the week which probably contributes to why this FS is hurting.
Looking forward to my next visit.
We stayed there in Oct 23, and it was wonderful, so was the city. SFO was as beautiful as always, shopping, dining, and just walking around was as great as it’s always been, but less crowded. We’ve been there dozens of times and worked there for years, so the visit allowed us to see that the media hysteria about the city’s “decay” has been overblown , as usual.
The homeless issue has always been an...
We stayed there in Oct 23, and it was wonderful, so was the city. SFO was as beautiful as always, shopping, dining, and just walking around was as great as it’s always been, but less crowded. We’ve been there dozens of times and worked there for years, so the visit allowed us to see that the media hysteria about the city’s “decay” has been overblown , as usual.
The homeless issue has always been an issue, as it is all over the country, but especially in California, because the weather is perfect and if you have to live outside, no state is better.
If you go looking for homeless encampments to trigger clicks on your maga websites, you can certainly find them, as you can in every major city in the USA, but SFO is still beautiful, and the vast majority of neighborhoods are not affected at all by the issues facing downtown and Market Street.
No it's f***ing not. SF's homeless problem is an order of magnitude more severe than Manhattan NYC.
I stayed there last year for a few nights and was not impressed. I much prefer the Market St location. The rooms are very cramped and oddly laid out, even after receiving an upgrade to a corner room. The bar is tiny, and they didn't even have a proper dining space at the time. Just a bar with maybe six seats and some tables. Yes, the views are fantastic. Probably the best in S.F. But I never stayed there again.
I’ve been going to SF regularly for work (and sometimes leisure) for the last several years, including 2021/2022 when things were pretty dicey. Here are some thoughts
1) There have been these homeless/drug/crime issues going back decades
2) They started to get worse 2018/2019, then obviously got dramatically worse in the Covid aftermath
3) When I returned for work travel in 2021, things were very bleak. That was the low for me....
I’ve been going to SF regularly for work (and sometimes leisure) for the last several years, including 2021/2022 when things were pretty dicey. Here are some thoughts
1) There have been these homeless/drug/crime issues going back decades
2) They started to get worse 2018/2019, then obviously got dramatically worse in the Covid aftermath
3) When I returned for work travel in 2021, things were very bleak. That was the low for me. No workers at all in the city, aggressive homeless, drugs everywhere, etc
4) They have made an effort over the last 12 months to clean things up, and voters are supporting more moderate policy.
5) The residential neighborhoods, restaurants, Warriors game, etc are all still packed. People will always want to live and play in San Francisco.
6) I see things improving going forward. Tourism is picking up. Someone can buy some of this distressed real estate and make money
7) But it is hard to see it reaching prior peaks any time soon. Too much work from home. Too many conventions gone to Las Vegas and such. Hotels are not going to make the money they once did.
I like this hotel, the Four Seasons on market, and several other hotels. I look forward to my next visit to the city.
Go woke, go broke.
I guess the same way your cult maga leader has gone woke. Figures.
Hahaha - that's a good one Frank's Alter Ego - and SO VERY true!! Who's going broke now? Oh wait, I though the Orange One was a billionaire 10 times over. Hahaha.
If either of you had accumulated any wealth you'd understand why a billionaire won't have half a billion in cash. It's also silly to give someone 30 days to sell 9-10 figure value properties in order to raise this cash just to have the right to appeal (see 8th amendment of the constitution).
I'd go over the definition of net worth, etc but since you probably don't own anything and live with your parents it's a moot point.
This isn't a SFO specific issue. The beginning of the commercial real estate crisis has arrived and the impact on the banks throughout this year will be substantial. But, yeah, keep pumping your $ into a record stock market!
Bingo. It's showing up in SF first and people are trying to tie it to the city's other challenges. Anyone in commercial real estate can tell you it's a much bigger issue all across the country.
Thank goodness there are two Four Seasons.
yes its definitely a change in work dynamics that did the hotel market in there. definitely...
Not surprised. The city is an unmitigated sh1thole.
Exactly. I had a convention in February I was supposed to attend and I specifically booked PTO to get out of it. I used to love going to San Francisco but now I try and avoid it at all costs. I last went in December of 2022 and it was disgusting, I vowed not to return until the politics aligns with reality. Unsurprising that unregulated liberalism and permissiveness has led to a the drugs, homelessness and prostitution that have destroyed an incredible city.
Couldn’t agree more, I loved San Francisco but over the years it’s lost its shine, we used to hold regular meetings in the city but we find ourselves elsewhere these days.
If you think prostitution destroys cities, it is hard to imagine what city you don't consider to be 'destroyed'...
The national media (to an extent) hasn't helped at all. People are scared to visit SF due to the propaganda machine telling them they're going to die if they come. I still travel to SF downtown from time to time, and there's nothing wrong with this city that's special compared to any other metro area in America. The homeless/drug issue is massively overstated in the news, and there aren't any real safety issues. Sure, it's...
The national media (to an extent) hasn't helped at all. People are scared to visit SF due to the propaganda machine telling them they're going to die if they come. I still travel to SF downtown from time to time, and there's nothing wrong with this city that's special compared to any other metro area in America. The homeless/drug issue is massively overstated in the news, and there aren't any real safety issues. Sure, it's maybe 80% of what it was pre-pandemic in terms of livelihood, but the city I remember as a younger man is still intact. I do think there was a year or two during covid where things got really bad here, but it's mostly lies now. On the plus side, there's a lot less crowds in places I like to visit.
I imagine the situation with crime and homelessness in San Francisco, real or perceived, is also affecting demand for leisure travel
Yeah, it’s just “perceived” lol. Unbelievable Ben didn’t touch on this obvious reason in the post.
As someone who actually lives in the Bay Area and works in SF, this issue is *massively* overstated in national media (and basically completely fictionalized in the right-wing media). As others have pointed out, homelessness has always been higher in California coastal cities -- with the best outdoor weather in the country (though it was never really an issue in the environs of this hotel). Things certainly took a dip during pandemic, but overall crime...
As someone who actually lives in the Bay Area and works in SF, this issue is *massively* overstated in national media (and basically completely fictionalized in the right-wing media). As others have pointed out, homelessness has always been higher in California coastal cities -- with the best outdoor weather in the country (though it was never really an issue in the environs of this hotel). Things certainly took a dip during pandemic, but overall crime statistics did not actually jolt up, despite what the Hannities of the world would like you to believe. And there has been an improvement as the pandemic has faded.
I make no excuses for San Francisco—although many of my SF-native friends have nothing but. Although I will say that SF and its hotels were dealing with rampant homelessness and crime downtown long before the pandemic. On my first trip to SF in 2008, I was followed into the Hotel Nikko lobby by a half-naked, crazed person holding a syringe and screaming at me. Security hustled him out and the employee checking me in said,...
I make no excuses for San Francisco—although many of my SF-native friends have nothing but. Although I will say that SF and its hotels were dealing with rampant homelessness and crime downtown long before the pandemic. On my first trip to SF in 2008, I was followed into the Hotel Nikko lobby by a half-naked, crazed person holding a syringe and screaming at me. Security hustled him out and the employee checking me in said, "we have a bit of a homeless issue in this area."