Walton Street Capital Places $13.5MM Mezzanine Loan on Hotel in San Francisco up for Sale

Huntington Hotel San Francisco Walton Street Capital JLL Deutsche Bank Woodridge Capital

By Jon Peterson

Chicago-based Walton Street Capital has offered up for sale the $13.5 million mezzanine loan it provided for the Huntington Hotel in San Francisco, according to sources that are aware of the situation with the property.

The lender has selected JLL to be the listing agent on the sale. Both Walton Street and JLL declined to comment when contacted for this story.

The loan provided by Walton Street is one of two mortgages that have been issued on the property. The other is a $47 million senior loan written by Deutsche Bank. Sources aware of the situation believe that the buyer of the mezzanine loan could look to foreclose on the property and then assume the senior debt on the asset.

Los Angeles-based Woodridge Capital is the current owner of the Huntington Hotel. The real estate investment firm had paid $51.9 million for the property in September 2018, according to public records. The asset is located at 1075 California Street. The hotel is not taking any calls at this time for new renovations, according to sources.

The Huntington Hotel, like many hotels, has been severely impacted since the outbreak of the pandemic. The property had produced room revenue of $13 million in 2019, according to hotel industry experts that track this type of information. The revenue in 2020 was down 50 percent from the figure a year earlier.

Should the sale of the mezzanine loan occur, it would represent one of the few distressed sales to occur in the hotel sector. There was anticipation that there would be a significant amount of distressed sales to occur with hotel properties during the pandemic, according to industry sources. This has not occurred for now, and there are several factors impacting that, including the fact that the hotel market was not overbuilt, many properties do not have large amounts of debt on them, and those that do have very low-interest rates allowing borrowers to hang on to their assets.

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