> Park Hotels failed to pay off a $725 million interest-only non-recourse mortgage that matured last November. 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 only owns the properties. 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 all it means for the hotel. The operating company remains the same.
> Park Hotels has been a catastrophic nightmare for retail investors. The misdeeds that sank Park Hotels’ shares didn’t happen on the streets of San Francisco – as the company ridiculously alleged – but in the C-suite of Park Hotels and on Wall Street. And its investors and now the holders of the CMBS are getting ripped off.
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’s fine here” kind of vibe to me.
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 underground parking at work. It was simply safer than walking.
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.
I'm not arguing with you, I'm arguing with other people here who apparently have no problem walking on shit, syringes and whatever else as long as loitering delinquents don't "look at them crossways".
Ah, gotcha, I see what you’re saying. I guess I’d just say that you seem to be implying that the human instinct for perception of danger is not really tied to actual danger. And while one could argue that in the modern day that may be true, I think there’s something to be said for the fact that our instinctual ability to perceive even potential danger has gotten us this far.
Getting accosted several homeless people in a short stretch feels unsafe, especially to the sort of out of towner who is not inured to it, in a way that driving does not. Both have a very low risk per unit of travel, but in the moment we have no way of qualitatively measuring that risk.
I stayed in SF for a few nights, it was pretty shocking to me the amount of homeless people (euphemism creep: temporarily unhoused) and the various tactics they employed to try and get money. One lady was just screaming at people in a fast food restaurant, I guess she was hoping to get paid in order to go away. This was 20 years ago and I hear the situation has only gotten worse since.
California treating homeless people like sacred cows is eventually going to wreck their inner cities for everyone.
Why is capitalism only creating homeless encampments in San Fran and not generally in the US? Maybe it’s not capitalism at fault here but a government that is unwilling or unable to supply standard social safety nets like homeless shelters and addiction therapy.
SF attracts homeless from all over the US, given its mild weather (great for living outside) and generous social services. It has been like that forever also, you can watch old movies from the 1920s about hobos jumping trains to get to SF (or LA, or Seattle, or Portland, or even Vancouver BC, choose any of the west coast cities, all for similar reasons).
People have freedom of movement in the USA, and they mostly take advantage of it.
> Maybe it’s not capitalism at fault here but a government that is unwilling or unable to supply standard social safety nets like homeless shelters and addiction therapy.
The issue is then how do you prevent one locality from having their resources swamped fixing what is really a national problem. SF can't fix the nations problems, so its voters/tax payers get jaded really quickly.
You’re right. For example in Soviet Russia – no one was homeless or unemployed, since everyone was guaranteed a place to live and a place to work.
Granted, gulags did not have the most comfortable accommodations, and you had to work long hours for free to live there, and potentially could end up in a mass grave, BUT at least you didn’t have to be accountable for your decisions like in these pig capitalist societies.
Agreed, but we should also also talk about how the social left basically got mental institutions shut down in the 80s, and how there is literally no place to put people who are unable to mentally deal with life in america.
Mentally ill people are a massive part of the homeless population and we basically just yeet them out on to the street.
Well, keep in mind that he was working somewhat odd hours. He would often be leaving work at around 23:00 or later. There are definitely parts of San Francisco where you do not want to be walking even a single block through that late.
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
I don't know SF all that well personally, so I really can't say. I do know that where the person I know stayed was in the Mission District, which was (and still is) widely known to be among the more dangerous parts of San Francisco. I also know he was routinely coming and going at odd hours, 23:00 or later.
I also know that he had a permit to carry a gun, which (at the time) was near impossible to get in California, and that he in fact did so. Nevertheless, he chose to drive the block and a half rather than walk, because the last thing he ever wanted to do was be forced to use his gun.
I personally don't consider that to be an “obvious display of wealth”, but take it for what you will.
People who go out of their way to carry guns in cities usually strike me as "more paranoid" and not "more cautious". I am far less likely to trust their assessment of danger.
So because someone values their life and belongings, and has the proper training to wield a firearm, you are less likely to trust their assessment of danger? So then who do you trust?
And for the record, Mission has almost 4x the crime rate as California, which is already above the national average.[1] So it seems as though their “paranoia” was paying dividends.
People who bring guns into urban areas have a bad assessment of danger, yes. There is almost no urban situation, especially on the street, where a concealed gun will help. It's not like anyone will give you a chance to draw your weapon if you are ambushed. And every mugger I've experienced or heard of starts with their weapon out or at least their hand on it. If you think you can quick-draw and beat them, you have watched too many movies.
And, for the record, the source you cited shows that crimes where you would be morally or legally justified to use deadly force to defend yourself (e.g. rape, murder, assault), are less frequent in California than the national average and less frequent in San Fransisco than in California's average. Absolutely, if you think using a gun is a valid response to someone breaking your car window you are absolutely not a good judge of threats. Nor are you a responsible gun owner and should be forced to surrender your gun.
Even through the worst parts of SF (hello caltrain station to the convention center), I never felt in danger when walking while visiting. Maybe this guy was a hypochondriac or something? I'm guessing some other factor was at play.
That are not run down. My complaint is against writers who are inaccurate. It’s frustrating and wastes my time when writers do this poor quality work with mistakes. And it doesn’t seem like a mistake so much as a deception.
It’s not “may or may not” as these hotels are clearly not run down.
You’re right about then neighborhood, but the point that the article is trying to make is that it’s the hotels that suck, not the neighborhood. But that’s not true
Not just hotels. Westfield just chose to default on its downtown shopping mall as well (the one that just lost its Nordstrom).
San Francisco progressives got their wish: those evil gentrifying techies are leaving in droves. Unfortunately for the progressives, that also means they are taking their money with them, that was being spent by SF like drunken sailors.
They didn't "fail to repay." Nobody ever repays this type of loan. They failed to refinance. And the fact that no one would refinance their $725 million loan means that the property has seriously declined in value.
It appears that the only thing that has declined here is the free money support for the fantasy valuation being claimed by the REIT. There are a lot of reasons that hundreds of billions in commercial real estate loans are going to be written off in the next few years and the original article mentioned none of them...
Apparently it wasn't a fantasy valuation because the banks lent against it. It is now a fantasy valuation because the properties have massively declined in value.
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.
From memory, yes. At least better, since SVB had an unusual high amount of uninsured deposits and Edit: other banks have more short term investments to cover withdrawls that were marketed to market, meaning they were more like cash equivalents than the long term stuff SVB had to sell at huge losses. And those losses kind of killed SVB.
> 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"
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.
Thanks for posting this but, his article doesn't make a lot of sense to me. If he could show the property owner was having equal similar difficulties in other cities his point would be stronger. As it is, It isn't even clear what he's saying.
Also, Hilton Union Square SF didn't seem 'run down' to me. I just had a conference there two weeks ago. The area around the hotel seems pretty quiet though...
> 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 all it means for the hotel. The operating company remains the same.
I'm curious about this part. Is that actually true? That sounds like the contract that the management company has is with the lender to begin with rather than Park Hotels? Or is the contract structured in a way that even if Park Hotels sells, the new owner needs to honor that existing contract?
I would expect there is some clause in their contract about novating it on transfer of the property ownership. Properties do get transferred, and it would be beyond insane not to have such a clause. It's not as if the operator of thy hotel can just rent another space down the road.
But not my industry, just seems like it would be reckless from the outside.
I'm sure the contract has terms that determine what happens on a sale, return to lendor or whatever else is going on. But I'm not convinced that the assumption that "nothing changes for the management company" is such an obvious assumption.
That article is full of fallacies. Brick and mortars in other large cities aren't closing like they are in San Francisco, especially not in the the epicenter of the financial district. Hotel rates in other cities have reached record highs while SF has declined even with inflation.[1]
The Hilton is absolutely run down. It's a very old building with some expensive decor inside. Walking in through an archaic vestibule and you see how dated it is. Look at the room photos in that link. The bathrooms have "granite" vanities but the floors and wall covering are so dated.
Even before COVID, other Bay Area cities have been building up convention space to compete with SF. SF hotels kept raising their prices and wonder where the customers are...
Me thinks similar things are going to happen (if they're not already) to Portland. I grew up there and then worked on SW 5th Ave from 2013 to 2018 and loved it. Since then I've been in Germany working. I went back last year to see family and my old "stomping grounds" near my old office and other places that I'd love to go eat at and such were overrun with folks with substance abuse issues, homelessness, etc., and many of the food carts and businesses/restaurants that I used to get fat at (I put on so much weight eating while going into the office it was hilarious) have closed and moved into suburbs or to other locations.
SW 5th and surrounding areas near the waterfront used to be the "nice" parts of town with very little open drug use, homeless camps, etc. (Don't get it twisted, I am 100% for more taxes, charity, efforts to help people get housed, get off drugs, whatever they need) But since returning the volume of people who need help is clearly turning the city into a place where businesses are reticent to invest in.
It's going to be interesting with the new ordinance to outlaw camping from dawn to sundown. If you camp during those hours, you face jail time. The theory is probably that this will separate hard core drug users from homeless people who aren't willing to go into a shelter. That'll be an interesting experiment.
When it comes to substance abuse, there is literally nothing a third party can legally do. Short of arresting you for committing a crime, or commiting you as a self harm risk (a worse experience than jail) your rights under the US constitution prevent you from being forced to do pretty much anything.
People need support. This support requires funding. This funding comes from taxes, which requires business operations and such. Business operations are impacted by perceptions of safety and cleanliness, which also requires funding and scales with the number of people who need support.
Your second paragraph makes sense, but only to the extent that one views people needing support as a local issue. This is one of the ways we (as a U.S. resident) avoid taking responsibility: This problem is some other locality's responsibility.
I'm no expert on US politics/taxes, but isn't the bay area already home to some of the richest companies on the planet? Mostly companies whose income comes from all over the globe, and hence is almost entirely independent of the state of San Francisco's streets?
And people on HN make it sound like the Bay Area is full of workers making several hundred of thousand of dollars a year, buying houses worth several million dollars, so income tax and property tax revenue should be off the charts too.
Isn't the bay area be absolutely swimming in tax revenue already?
SF's problems do not stem from lack of money. The City's budget went from $6B in 2008 to $13B today. That's more than entire countries (SF would by #80 in the UN after Nigeria and before Sri Lanka). They could afford to buy every homeless man, woman and child (7,000 total) a $1M condo with just one year's worth of the tech windfall. By my calculations, the city bureaucracy captured at least 40% of that in salaries and benefits, and I'm sure the welfare-industrial complex took its cut as well, while failing the people it ostensibly serves.
If SF raises additional taxes, the few companies left will simply decamp to other places in the Bay Area like San Jose. The crime and quality of life issues are already pushing them to do so. They only set up shop in SF after 2000 because that was the only way to attract talent from Berkeley or SF who were not willing to commute to the South Bay, but in the new job market environment that is no longer an issue.
> they are outlawing an act of desperation which their own policies are driving people to. America is insane.
So you mean, they should be allowed to keep their stuff (e.g. lots of stolen bikes) strung out in the middle of a park during a day, and they shouldn't have to move into shelters because they can't deal with their drug habits?
If this were Switzerland (or specifically, Lausanne where I used to live), the Swiss police would really not take any of that crud. They would apply lots of tough love, swiss style, before it got to that point.
Portland is literally filled with bleeding heart liberals in comparison (and actually is, people are just losing patience).
It actually does, it just can't decide if it wants to be authoritarian or permissive in dealing with its social problems, so even though we throw a lot of money and resources at these problems, they aren't very effective. What's more is that every city/state/locality has its own strategy, and they are all different.
It's only a feeling, and might be confirmation bias (I moved abroad as well) but it feels like more people I know are leaving the US entirely. Certainly more of my peer group than my parents' generation.
That’s going to be a lot poor people moving from poor countries. But to OP’s point, there are a lot of middle-upper class, especially remote workers that are looking to get the heck out of the US. I am one of them. When sex changes for children is a topic of national debate, or my kids are being taught that your skin color makes you racist — it’s time to go.
No joke much of the US business exceptionalism is from immigration. For whatever reason many a foreign national wants to go to the US to take part in that 50-cent dream of get[ting] rich or d[ying] trying.
Absolutely, which is part of why I mention my peer group. But if you're a mid-30's programmer with a family (or planning to start one) the EU can be tempting, if you can work around the large salary gap.
To be fair a 150k EUR salary (about where I am as it turns out) can be had in Europe but I don't think it's done "easily" for most people, at least compared to major US cities.
But I literally don't care. I already have a paid off house, and I just don't need anything. My big goal in life is to have a 3 bed flat or townhouse where my kids can run out the door and ride their bikes to their friends' houses (and school, and the cinema, etc.) and I'm not worried about them. I don't want a fancy car (or any car, actually), gadgets, etc.
I kinda wanted to FIRE at one point but that was only because I hated what I was doing. Finding work from climatebase.org or similar helps a lot with that. I would LOVE to work for humankind.city, for instance.
I figured easily for the staff level and above engineer making 3-4x that amount and wanting to move to Europe. For the rest of us something close to 100k is easily doable.
I agree. I miss a lot of home (family, taco bell, friends, some freedoms) but I really do enjoy the healthcare, the lack of anxiety from gun violence, the stable government, and the lack of stress.
I am trying to get folks I know to move out of the US, too!
Hah! Admittedly good taco shops and In-N-Out are something I miss about the bay, along with many other wonderful things. I wouldn't mind at least _some_ of that can-do spirit and willingness to take risks, either, cheesy as it sounds.
I bring up US working holiday visa arrangements (with Ireland, Australia, New Zealand, Singapore, and South Korea), the Dutch American Friendship Treaty (surprisingly straightforward way to live in the Netherlands if you can employ yourself), recent loosening of German immigration rules, and oddball options like the French Foreign Legion or living in Svalbard far too often in casual conversation.
I have had authentic Tacos and I do love them and real Mexican food ... but there's something visceral, nostalgic, about Taco Bell. It was the first meal I can remember we ever had growing up that wasn't cooked at home (we never ate out, we always had home cooked food and then one day mom was just tired and we hit up the local TacoBell and I was hooked ever since). And then the only happy memory with my Dad was at a Taco Bell with him throwing way too many hot sauce packets on the hard shelled tacos (he was East Indian so chewing on habeneros at the store and picking the hotter ones was a normal thing so...), shortly after this random experience, he passed away suddenly while on a business trip.
Anyway, I miss that greasy, bastardization of the taco...
Immigration and liberal laws unto it will save nations I think. Countries going forward will need skilled labor more than ever as birth rates fall.
Germany has been good to me, Berlin especially, but if I were to do it all over again, I'd try my hardest to get placed at a company in Amsterdam. What an amazing place that place is.
I have similar fond memories of Taco Bell. The 59, 79, 99 cent menu sustained me as a teenager.
As it turns out I am forming a BV and working on moving to Utrecht in the next few months. Ireland was good to me as well, but has not been a great place to raise kids.
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).
What kind of PMS integrations did you look for? The space is horrible (especially so after Oracle bought Micros-Fidelio) but there are a ton of companies offering interfacing middlewares that connect to a ton of different PMS systems and offer a unified API.
Don’t forget that the guy who bought a bunch of distressed real estate in Detroit is now a multi-billionaire, owns a few sports teams, and wrote a public FU letter to Lebron in comic sans…
NYC has the unique distinction among Democrat-run large cities of having a well-funded and well-staffed police authority that is not (yet) hamstrung by political interference. The NYPD is actually feared and respected by would-be criminals, which is a far cry from SFPD, PPB, et. al.
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 other cities that have seen a run up in recent years.
Per the docs, yes. But any capital improvements made are building equity and would affect the LTV of the loan when it comes time to refinance (or default).
The theoretical use of interest only is to acquire the property and upmanage it to increase rents (or for a hotel, utilization and nightly stays) since the value is directly based on monthly incomes.
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)
> 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%.
For home loans, even non recourse, it is not a purely financial transaction. Defaulting on a loan stays on your credit report for a while and might not only hit your chances of getting another loan, give a (small) hit to your job search (especially if you apply to a company outside US that would run a credit check), etc.
As someone who absolutely ADORED living in Berkeley in 2009 (by Ashby bart specifically) but was priced out (and eventually moved abroad entirely) it's hard not to feel some schadenfreude.
IDK about living there, it's been ~6-7yrs since I last did, but San Francisco can be quite shocking to tourists/new arrivals (this article is about hotel stays which is a combo of tourists and business travelers). I remember feeling that when I first visited and the first thing I saw coming out of BART from the Airport was someone openly pissing next to the subway entrance, which contrasted weirdly with the beautiful views. I wrote it off at first until I saw it happen multiple times that week, then later just some guy sitting next to hit wall with his dick out. Later that same visit the girl I was with was robbed and the police never showed up after 3hrs waiting (apparently not a high priority).
Then there's the garbage and generally griminess of it. People are claiming it's gotten worse since then, which I can't personally attest to.
It's not like being a tourist/visitor in Manhattan or Austin/San Antonio or Chicago.
Maybe I'm biased having grown up in Toronto which is clean/safe.
Last time I've been to SF was in 2015, I get out of the BART train at Market St. early afternoon, and on the corridor to the exits there are 2 people, one lying on the floor, another shooting heroin. Out of the station, going to cross Market St. to grab something to eat, someone stops behind me while I'm waiting for the traffic light on the zebra crossing and start to scream, loud as I'd never heard someone scream in my life. Two days later I ended up inadvertently walking by Tenderloin and got fucking harassed to the point where I paced very briskly out of there.
> It's not like being a tourist/visitor in Manhattan
On this same trip some 2 weeks later I arrived in NYC, got to Jamaica Station from JFK to catch the metro, going upstairs on the elevators I take a round for the next flight of escalators and there's someone squatting close to the railing, taking a shit, naked, right there while dozens of people are passing by. Later in Manhattan I'm staying in Hell's Kitchen, very close to PABT, a guy tries to mug me when I'm going to a 7-11, I get away from the attempt just to get to a corner store and see a fight breaking out...
Just giving some anecdotes of just one of the trips I made to the USA, I had many other odd encounters during other trips, I have never experienced much of that (apart from the mugging when I still lived in Brazil) in other parts of the world I've lived at or traveled to.
What does “that bad” even mean? Like in some kind of relative sense, people still live there and go about their lives. Some of the things that made it a popular and pleasant city are intact. In an absolute sense, if you were to compare SF with Zurich, you would conclude that it’s a lawless mad max anarchy.
Obviously geography and climate don’t change. But saying people still go about their daily lives doesn’t describe much. People in Kiev go about their daily lives and so did people in Mogadishu. It doesn’t mean newcomers would find it inviting.
> The city’s lodging business has been squeezed by crime and other quality-of-life issues that have kept many convention bookers away.
> concerns over public safety are prompting groups and associations to shift their business to markets like Las Vegas
and the links [0], [1] in the article are even worse
> There has been an exodus of retailers and other businesses from the mid-Market Street area of downtown amid rampant public drug use and homelessness.
> “We try to call security, but they are usually busy. So we just let them do what they want.”
No. It got bleak during the pandemic, but it has bounced back nicely. The real estate and hospitality sectors took major haircuts after a long run of unbounded exuberance and they want everyone to know that it is somebody’s fault. The city has problems but the only one that has really gotten worse in the past 2 years is the real estate prices going down.
*edit, the
Magnitude of problems is as high as ever but the derivative is not. For people who don’t live in the city there are some pretty nasty things and nasty areas, but you get used to this things are not that different from where they were 5 years ago.
Compared to basically any modern city in Europe or Asia, yes. Downtown SF feels completely different - dirty, much less safe, homeless people and drugs everywhere.
It's not even close.
Note, I'm only talking about downtown SF, not the wider Bay Area.
I was there in May. It’s actually probably better than the last time I was there, which was admittedly almost 20 years ago. But now, yeah, just normal stuff that anyone who lives in even a smaller city is used to.
A lot of techies moved here and ruined everything. No matter how many thousands of these types of posts make it to the top of HN, they won't leave. It's maddening.
I've stayed in several 4-stars in SF in the past two years, and while none were bad, they are clearly still suffering from staffing issues and spreading things thinly due to fewer bookings. If you have a choice to stay in SF or somewhere else, somewhere else is usually nicer. Crime and homelessness has turned SF from that quaint city by the bay, to that quaint city you don't feel safe walking around in. With the loss of convention tourism and the slow erosion of the SV gravy train there's zero reason left to invest in SF. Expect the decline to continue unabated. I bet in 10 years SF will once again be an affordable place to live.
That's arguably actually a sign of a hot hotel market; if any room will rent, then, really, why bother updating anything? (Caveat: in many European cities with very hot hotel markets, you'll see a lot of shiny new hotel rooms, but it's largely because hotels are redesigning themselves to put more rooms in the same space. This seems way less common in the US; I think Americans are way more bothered about how big the rooms are.)
Of course, covid disrupted that to an extent, particularly for cities which were heavily reliant on business travel for their hotel business (I'd be a little surprised if business travel _ever_ returns to pre-covid rates).
I'm in SF occasionally for work, and, yeah, the hotels are notably, almost impressively, dated. Beyond the presence of the obligatory flatscreen TV, most of the rooms probably looked much the same in the 80s.
If the market actually _is_ cooling down severely (based on the article, one could be forgiven for thinking this is more a case of a company abruptly discovering that property values don't automatically go up forever, which is a lesson that property investors tend to learn every couple of decades) then you'd actually expect that to change, as hotels have to compete on the product being offered rather than just taking a "look, here's a room, there are no rooms, obviously you will rent it" approach.
TIL that SF politicians created the COVID pandemic and drove the WFH policies that emptied out the business district.
SF suffers from many of the same problems that other much-more-conservative cities suffer from, but you don’t hear about them as much because it doesn’t fit a narrative.
I live in NYC, and visit SF often for work. I’m fascinated in the similarities and difference between the cities.
For example, pre-pandemic SF public transport had half the daily ridership per capita that NYC had, implying workers there were much more dependent on cars. That, combined with the much lower housing density, meant that white-collar workers were much less interested in returning to the office.
NYC and SF have a similar unhoused percentage, yet one seems worse. Maybe a bunch of that is due to laissez-faire policing? But it could also be due to SF’s climate that makes being out on the street year-round slightly more doable.
Downtown has particularly low housing density. How much of that is due to SF government, and how much is due to big tech paying ridiculously high rents for buildings?
Do you have any citations to back up “SF is just as bad as X city?” I travel a lot as work out of a SF office. It really is a lot worse than say Los Angeles which is a high bar to cross. I think the biggest difference between SF and other cities is that SF supports criminals. Car break ins are not investigated. Shoplifting is legal. Drug use is effectively legal. Physical assault/robbery is effectively legal for some cohorts. Criminals come to SF for these reasons. It’s lawlessness supported by the city council. And they’re currently talking about giving every black resident $6M dollars because of the California slave trade, mind you slavery was never in CA. But this is what the city council is interested in. These people are interested in exacerbating the problem, not fixing it. I keep thinking there’s some threshold, but there isn’t, SF seems destined to become like Detroit.
This is a really good point. Many people who want city life no longer need to be in the Bay Area and can live in NY. That does dampen street life and makes it less attractive for conventions or vacation.
SF was a place to cosplay city life for people who commuted into Silicon Valley. Recently the VC network seemed to claim it but that's by definition small numbers.
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!
You want taxpayers to pay $500 per night for homeless? I would be furious to be paying confiscatory taxes and have those taxes go to literally putting zombie drug addicts in hotels. Very unfair to those of us that work hard to pay all those taxes. Perhaps build work camps in the Mojave instead and ship them there. Start making intentional homelessness arduous and you’ll see less of it. Prosecute illegal drug dealing and usage in public. Prosecute shoplifting. San Francisco has one do the largest homeless populations in the country. It’s because of the policies. Change the policies and many homeless will leave.
>You want taxpayers to pay $500 per night for homeless? I would be furious to be paying confiscatory taxes and have those taxes go to literally putting zombie drug addicts in hotels.
If my memory is working they are paying about $60k a year per homeless person to address it now, which is $160+ per night now. Yes $500 is high, but the $165 is closing in on a "nice" hotel room per night now.
It does not have to be a desert, it could be Manteca[1]. lots of people live and work in Manteca and call it home. If there would be people eligible who are productive (taking classes, working, providing care for someone) then we could keep them in SF, else, we need to be able to provide them affordable (to the city/taxpayers) shelter and recovery services in facilities set up for that and there is no reason Manteca could not be such a place.
It's cheaper to operate in Manteca. That's the point. Paying 500/night for just shelter doesn't make sense. It could be in an unincorporated area. These people need shelter, supervision and treatment till they get better.
At 500/night that's... $15,000 mo. I can't imagine they could not find a cheaper solution renting housing in Manteca or elsewhere in the valley. At 500/night that's just lining pockets somewhere at the expense of multiple levels of taxpayers.
I can never tell if these things are SF residents expressing frustration, or people outside of SF expressing a sort of wishful spite. I sort of learned my lesson in taking these things at face value with that evolving story of the tech exec who was stabbed.
That said, what did strike me as a little odd were a lot of comments on the Vision Pro threads about where if you walk around with it on outside, you'll be instantly mugged. That's just... not the case where I live in my Indiana suburb. I leave my front door unlocked, and have had no issues leaving my laptop visible on the seat of my locked car when I'm out and about. People here seem to take for granted some amount of low level violence and theft as normal, which shocks me. I don't know if comments like those come from Bay Area residents, but I sort of assumed so because I've thought that's where the user base here skews.
> That said, what did strike me as a little odd were a lot of comments on the Vision Pro threads about where if you walk around with it on outside, you'll be instantly mugged.
I mean, as someone who visits San Francisco for work from time to time... I'm fairly sure that's not actually true? It's never felt particularly unsafe; it's just a normal largish city (albeit with an awful lot of homelessness).
SF is pretty famous for car break ins. The attitude of the police and the population at large is if you left ANYTHING in your car it’s your fault for baiting the car. The police do nothing when it happens, and it happens many, many times a day. Source: I fly in to my company’s SF HQ frequently and this is both what the locals say and it’s also my experience there. SF is on a whole different level when it comes to car break ins.
> The attitude of the police and the population at large is if you left ANYTHING in your car it’s your fault for baiting the car.
... Is that not the attitude of the police _everywhere_, though? I've never heard of the police anywhere taking much of an interest in items stolen from cars; it's not like they really have a realistic way to pursue that even if they wanted to.
Police is one thing, but it's just sad when the general consensus of the population is to pin the blame on the victim, even in muggings or knife assaults "It's your fault for wearing/carrying [x]".
Yeah it’s a sad state of affairs. It’s the stripping of freedom that I can’t believe people live with. If you can’t leave your home without considering you might be the target of a crime, you’re not free.
The mentality I don’t understand is the whole it’s “part and parcel” for living in a city. That it’s normal for crime to creep around, for litter and feces to be spread, and for drugged out people to be laying in the streets.
That’s not normal and it’s considered unacceptable in many places. Places for free than SF nowadays.
I lived there for around 8 years, and specifically near City hall for around 6 of those. My neighborhood near City Hall became increasingly unsafe over time, and after witnessing a couple of incidents such as an unarmed robbery which resulted in a physical altercation with an employee at my local Walgreens, an accidental fire started in the encampment outside of my building which partially set fire to the building and broke my neighbor's window, and the realization that the leaders of the city were not in any hurry to make any improvements here, I decided I no longer felt safe or comfortable in this area and moved.
In my opinion it's not so much homelessness that is the issue, but rampant heavy drug use (methamphetamine and fentanyl). I think the term homeless is a misnomer. It's the debilitating drug use and the consequences of what that does to people's behavior that causes downstream issues to public safety. Working class people who are trying to do everything right (like the Walgreens worker) are the ones most impacted, and that to me is the most frustrating part.
People also move from all cities to the suburbs all the time and have done so for generations. The complainers feels it's because their freedom is being taken away rather than just living where they're most comfortable.
Major US cities are mentioned almost daily in right wing media especially cable news. So there's a knee jerk reaction to repeat those talking points among people who want to be VCs or law enforcement.
I believe that SF hotel occupancy is down, but it's not for the typical reasons that are fanned around: there are numerous South San Francisco hotels that are MUCH cheaper, 15-20 minutes away, and have free shuttles to the airport (SFO).
A lot of these SSF hotels are new and close to a quite a few ex-SoMa tech companies now in Oyster Point.
Apropos of nothing, on a 3 day trip, I did see a man, minding his own business walking, get "ride-by" assaulted by a mentally ill bicyclist in the marina. I think this fits with what I'm hearing about not prosecuting that type of thing there. Other than that event, the areas in SF I saw seemed cleaner/safer than it was pre-covid.
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[ 2.8 ms ] story [ 153 ms ] threadhttps://wolfstreet.com/2023/06/12/ive-had-it-with-stupid-stu...
> Park Hotels failed to pay off a $725 million interest-only non-recourse mortgage that matured last November. 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 only owns the properties. 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 all it means for the hotel. The operating company remains the same.
> Park Hotels has been a catastrophic nightmare for retail investors. The misdeeds that sank Park Hotels’ shares didn’t happen on the streets of San Francisco – as the company ridiculously alleged – but in the C-suite of Park Hotels and on Wall Street. And its investors and now the holders of the CMBS are getting ripped off.
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’s fine here” kind of vibe to me.
[0] Hilton San Francisco Union Square (415) 771-1400 https://maps.app.goo.gl/EPnQC4pbbwRKNjNh9?g_st=ic
[1] Parc 55 San Francisco - a Hilton Hotel (415) 392-8000 https://maps.app.goo.gl/p9SprpPdGZxzbejf8?g_st=ic
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 underground parking at work. It was simply safer than walking.
Having said that, a lot has changed since 2009
I stayed in SF for a few nights, it was pretty shocking to me the amount of homeless people (euphemism creep: temporarily unhoused) and the various tactics they employed to try and get money. One lady was just screaming at people in a fast food restaurant, I guess she was hoping to get paid in order to go away. This was 20 years ago and I hear the situation has only gotten worse since.
California treating homeless people like sacred cows is eventually going to wreck their inner cities for everyone.
https://en.wikipedia.org/wiki/Homelessness_in_Russia
https://en.wikipedia.org/wiki/Homelessness_in_China
https://en.wikipedia.org/wiki/Kotjebi
SF attracts homeless from all over the US, given its mild weather (great for living outside) and generous social services. It has been like that forever also, you can watch old movies from the 1920s about hobos jumping trains to get to SF (or LA, or Seattle, or Portland, or even Vancouver BC, choose any of the west coast cities, all for similar reasons).
People have freedom of movement in the USA, and they mostly take advantage of it.
> Maybe it’s not capitalism at fault here but a government that is unwilling or unable to supply standard social safety nets like homeless shelters and addiction therapy.
The issue is then how do you prevent one locality from having their resources swamped fixing what is really a national problem. SF can't fix the nations problems, so its voters/tax payers get jaded really quickly.
Mentally ill people are a massive part of the homeless population and we basically just yeet them out on to the street.
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
I also know that he had a permit to carry a gun, which (at the time) was near impossible to get in California, and that he in fact did so. Nevertheless, he chose to drive the block and a half rather than walk, because the last thing he ever wanted to do was be forced to use his gun.
I personally don't consider that to be an “obvious display of wealth”, but take it for what you will.
This person sounds like they have some mental issues.
And for the record, Mission has almost 4x the crime rate as California, which is already above the national average.[1] So it seems as though their “paranoia” was paying dividends.
[1] - https://www.areavibes.com/san+francisco-ca/mission/crime/
And, for the record, the source you cited shows that crimes where you would be morally or legally justified to use deadly force to defend yourself (e.g. rape, murder, assault), are less frequent in California than the national average and less frequent in San Fransisco than in California's average. Absolutely, if you think using a gun is a valid response to someone breaking your car window you are absolutely not a good judge of threats. Nor are you a responsible gun owner and should be forced to surrender your gun.
That are not run down. My complaint is against writers who are inaccurate. It’s frustrating and wastes my time when writers do this poor quality work with mistakes. And it doesn’t seem like a mistake so much as a deception.
It’s not “may or may not” as these hotels are clearly not run down.
You’re right about then neighborhood, but the point that the article is trying to make is that it’s the hotels that suck, not the neighborhood. But that’s not true
San Francisco progressives got their wish: those evil gentrifying techies are leaving in droves. Unfortunately for the progressives, that also means they are taking their money with them, that was being spent by SF like drunken sailors.
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.
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.
Also, Hilton Union Square SF didn't seem 'run down' to me. I just had a conference there two weeks ago. The area around the hotel seems pretty quiet though...
WSJ article seems fine as these things go.
I'm curious about this part. Is that actually true? That sounds like the contract that the management company has is with the lender to begin with rather than Park Hotels? Or is the contract structured in a way that even if Park Hotels sells, the new owner needs to honor that existing contract?
But not my industry, just seems like it would be reckless from the outside.
Surely they and their counter parties did some modeling and stress tests.
[1] https://www.otainsight.com/resources/blog/us-hotel-pricing-t...
Even before COVID, other Bay Area cities have been building up convention space to compete with SF. SF hotels kept raising their prices and wonder where the customers are...
SW 5th and surrounding areas near the waterfront used to be the "nice" parts of town with very little open drug use, homeless camps, etc. (Don't get it twisted, I am 100% for more taxes, charity, efforts to help people get housed, get off drugs, whatever they need) But since returning the volume of people who need help is clearly turning the city into a place where businesses are reticent to invest in.
People need support. This support requires funding. This funding comes from taxes, which requires business operations and such. Business operations are impacted by perceptions of safety and cleanliness, which also requires funding and scales with the number of people who need support.
And people on HN make it sound like the Bay Area is full of workers making several hundred of thousand of dollars a year, buying houses worth several million dollars, so income tax and property tax revenue should be off the charts too.
Isn't the bay area be absolutely swimming in tax revenue already?
If SF raises additional taxes, the few companies left will simply decamp to other places in the Bay Area like San Jose. The crime and quality of life issues are already pushing them to do so. They only set up shop in SF after 2000 because that was the only way to attract talent from Berkeley or SF who were not willing to commute to the South Bay, but in the new job market environment that is no longer an issue.
https://www.slowboring.com/p/they-have-homelessness-in-europ...
So you mean, they should be allowed to keep their stuff (e.g. lots of stolen bikes) strung out in the middle of a park during a day, and they shouldn't have to move into shelters because they can't deal with their drug habits?
If this were Switzerland (or specifically, Lausanne where I used to live), the Swiss police would really not take any of that crud. They would apply lots of tough love, swiss style, before it got to that point.
Portland is literally filled with bleeding heart liberals in comparison (and actually is, people are just losing patience).
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
It's this. America does not invest in its social problems.
But I literally don't care. I already have a paid off house, and I just don't need anything. My big goal in life is to have a 3 bed flat or townhouse where my kids can run out the door and ride their bikes to their friends' houses (and school, and the cinema, etc.) and I'm not worried about them. I don't want a fancy car (or any car, actually), gadgets, etc.
I kinda wanted to FIRE at one point but that was only because I hated what I was doing. Finding work from climatebase.org or similar helps a lot with that. I would LOVE to work for humankind.city, for instance.
I am trying to get folks I know to move out of the US, too!
I bring up US working holiday visa arrangements (with Ireland, Australia, New Zealand, Singapore, and South Korea), the Dutch American Friendship Treaty (surprisingly straightforward way to live in the Netherlands if you can employ yourself), recent loosening of German immigration rules, and oddball options like the French Foreign Legion or living in Svalbard far too often in casual conversation.
Anyway, I miss that greasy, bastardization of the taco...
Immigration and liberal laws unto it will save nations I think. Countries going forward will need skilled labor more than ever as birth rates fall.
Germany has been good to me, Berlin especially, but if I were to do it all over again, I'd try my hardest to get placed at a company in Amsterdam. What an amazing place that place is.
I have similar fond memories of Taco Bell. The 59, 79, 99 cent menu sustained me as a teenager.
As it turns out I am forming a BV and working on moving to Utrecht in the next few months. Ireland was good to me as well, but has not been a great place to raise kids.
/me google's "Dutch American Friendship Treaty"...
Renouncing US citizenship?
?Moving out of the US with children
Buying a home and declaring ?residency outside the US
These to me are what define leaving entirely.
Taking a gap year, for example, does not count.
> 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/press_releases/release/str-u-s-...
Don’t forget that the guy who bought a bunch of distressed real estate in Detroit is now a multi-billionaire, owns a few sports teams, and wrote a public FU letter to Lebron in comic sans…
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 other cities that have seen a run up in recent years.
Per the docs, yes. But any capital improvements made are building equity and would affect the LTV of the loan when it comes time to refinance (or default).
Then refinance and-or sell.
Class A office space rents for much more than Class B. You can convert (usually, but not always) Class B to Class A with capital improvements.
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%.
And they do get a bit spicy when home values decrease.
Then there's the garbage and generally griminess of it. People are claiming it's gotten worse since then, which I can't personally attest to.
It's not like being a tourist/visitor in Manhattan or Austin/San Antonio or Chicago.
Maybe I'm biased having grown up in Toronto which is clean/safe.
> It's not like being a tourist/visitor in Manhattan
On this same trip some 2 weeks later I arrived in NYC, got to Jamaica Station from JFK to catch the metro, going upstairs on the elevators I take a round for the next flight of escalators and there's someone squatting close to the railing, taking a shit, naked, right there while dozens of people are passing by. Later in Manhattan I'm staying in Hell's Kitchen, very close to PABT, a guy tries to mug me when I'm going to a 7-11, I get away from the attempt just to get to a corner store and see a fight breaking out...
Just giving some anecdotes of just one of the trips I made to the USA, I had many other odd encounters during other trips, I have never experienced much of that (apart from the mugging when I still lived in Brazil) in other parts of the world I've lived at or traveled to.
> The city’s lodging business has been squeezed by crime and other quality-of-life issues that have kept many convention bookers away.
> concerns over public safety are prompting groups and associations to shift their business to markets like Las Vegas
and the links [0], [1] in the article are even worse
> There has been an exodus of retailers and other businesses from the mid-Market Street area of downtown amid rampant public drug use and homelessness.
> “We try to call security, but they are usually busy. So we just let them do what they want.”
[0] https://archive.is/C6FPb [1] https://archive.is/pG5oN
*edit, the Magnitude of problems is as high as ever but the derivative is not. For people who don’t live in the city there are some pretty nasty things and nasty areas, but you get used to this things are not that different from where they were 5 years ago.
It's not even close.
Note, I'm only talking about downtown SF, not the wider Bay Area.
SF has some of the worst hotels I've seen anywhere. So much hasn't been updated for decades and it definitely shows.
Of course, covid disrupted that to an extent, particularly for cities which were heavily reliant on business travel for their hotel business (I'd be a little surprised if business travel _ever_ returns to pre-covid rates).
I'm in SF occasionally for work, and, yeah, the hotels are notably, almost impressively, dated. Beyond the presence of the obligatory flatscreen TV, most of the rooms probably looked much the same in the 80s.
If the market actually _is_ cooling down severely (based on the article, one could be forgiven for thinking this is more a case of a company abruptly discovering that property values don't automatically go up forever, which is a lesson that property investors tend to learn every couple of decades) then you'd actually expect that to change, as hotels have to compete on the product being offered rather than just taking a "look, here's a room, there are no rooms, obviously you will rent it" approach.
I think it's a hard problem to solve.
AFAICT, it's a topic where different political ideologies suggest very different (and largely incompatible) solutions.
SF suffers from many of the same problems that other much-more-conservative cities suffer from, but you don’t hear about them as much because it doesn’t fit a narrative.
I live in NYC, and visit SF often for work. I’m fascinated in the similarities and difference between the cities.
For example, pre-pandemic SF public transport had half the daily ridership per capita that NYC had, implying workers there were much more dependent on cars. That, combined with the much lower housing density, meant that white-collar workers were much less interested in returning to the office.
NYC and SF have a similar unhoused percentage, yet one seems worse. Maybe a bunch of that is due to laissez-faire policing? But it could also be due to SF’s climate that makes being out on the street year-round slightly more doable.
Downtown has particularly low housing density. How much of that is due to SF government, and how much is due to big tech paying ridiculously high rents for buildings?
SF has much more property crime than Los Angeles, but lower violent crime than Los Angeles (and most other big cities).
SF was a place to cosplay city life for people who commuted into Silicon Valley. Recently the VC network seemed to claim it but that's by definition small numbers.
[1]Manteca, Stockton, Modesto, Fresno, etc.
(Not that there’s any point in discussing this in the first place, since it will never actually happen.)
I was there some 4 years ago, and I met some homeless folks for sure, but the city was nice.
That said, what did strike me as a little odd were a lot of comments on the Vision Pro threads about where if you walk around with it on outside, you'll be instantly mugged. That's just... not the case where I live in my Indiana suburb. I leave my front door unlocked, and have had no issues leaving my laptop visible on the seat of my locked car when I'm out and about. People here seem to take for granted some amount of low level violence and theft as normal, which shocks me. I don't know if comments like those come from Bay Area residents, but I sort of assumed so because I've thought that's where the user base here skews.
I mean, as someone who visits San Francisco for work from time to time... I'm fairly sure that's not actually true? It's never felt particularly unsafe; it's just a normal largish city (albeit with an awful lot of homelessness).
... Is that not the attitude of the police _everywhere_, though? I've never heard of the police anywhere taking much of an interest in items stolen from cars; it's not like they really have a realistic way to pursue that even if they wanted to.
The mentality I don’t understand is the whole it’s “part and parcel” for living in a city. That it’s normal for crime to creep around, for litter and feces to be spread, and for drugged out people to be laying in the streets.
That’s not normal and it’s considered unacceptable in many places. Places for free than SF nowadays.
In my opinion it's not so much homelessness that is the issue, but rampant heavy drug use (methamphetamine and fentanyl). I think the term homeless is a misnomer. It's the debilitating drug use and the consequences of what that does to people's behavior that causes downstream issues to public safety. Working class people who are trying to do everything right (like the Walgreens worker) are the ones most impacted, and that to me is the most frustrating part.
A lot of these SSF hotels are new and close to a quite a few ex-SoMa tech companies now in Oyster Point.
Apropos of nothing, on a 3 day trip, I did see a man, minding his own business walking, get "ride-by" assaulted by a mentally ill bicyclist in the marina. I think this fits with what I'm hearing about not prosecuting that type of thing there. Other than that event, the areas in SF I saw seemed cleaner/safer than it was pre-covid.