A historic San Francisco hotel nestled atop famed Nob Hill was bought for a fraction of the property’s assessed value, a review of multiple property documents shows.
The new owners of the Huntington Hotel paid slightly less than $29.3 million for the lodging tower in San Francisco, according to a trustee’s deed on file with the County Recorder’s Office.
New York City-based Highgate Capital Investments and San Francisco-based Flynn Properties, acting through an affiliate, 1075 California Street Owner, seized ownership of the property through the trustee’s deed and foreclosure of a loan on the property.
Highgate Capital and Flynn Properties bought the 135-room hotel at 1075 California Street through a two-step process.
On March 16, Highgate and Flynn assumed ownership of a delinquent loan of $56.2 million that was the mortgage on the hotel.
Deutsche Bank had provided the loan to the Huntington Hotel’s prior owner, Woodridge Capital Partners, which had allowed the mortgage to lapse into default in the wake of the coronavirus pandemic.
On March 17, a group led by Highgate Capital and Flynn Properties foreclosed on the loan and bought the hotel.
On the same day that Highgate and Flynn officially bought the hotel, they also obtained a loan of $26.6 million from Deutsche Bank to finance the purchase, county property records show.
The known components of the deal hint at declining values for this hotel, which was built in 1922 as an apartment tower and then converted soon after to a hotel.
The 12-story Huntington Hotel in mid-2022 had an overall real estate value of $87.6 million, county assessment records show. The land beneath the hotel alone was worth $51.7 million in July 2022. Woodridge Capital bought the hotel for about $87 million in 2018.
Highgate’s expertise includes working with lenders to take control of hotels that are in financial distress. Flynn Properties is a real estate management and investment firm.
The financial turmoil that has engulfed the Huntington Hotel is a reminder that the coronavirus pandemic continues to afflict the lodging, travel, restaurant and leisure sectors, sometimes in unexpected ways and places.
San Francisco’s economy in particular continues to reel from the aftermath of the business shutdowns ushered in by state and local government officials to stop the spread of the deadly virus.
The new owners hope to revive the property as a top-notch hotel.
“Highgate and Flynn Properties intend to restore and elevate every aspect of The Huntington Hotel to the very highest standard, returning it to its original glory while reestablishing it as the single finest luxury hotel in San Francisco,” the new owners said in March.
Still, it’s possible that the resuscitation of the hotel is likely to take years to accomplish. The hotel closed its doors amid the coronavirus shutdowns and is due to reopen in 2025, Highgate and Flynn estimate.
“The Huntington will reclaim its mantle as an indispensable component of the San Francisco community, through a revitalization project that will celebrate its heritage while making significant upgrades to meet the expectations of today’s guests,” said Arash Azarbarzin, Highgate’s chief executive officer.
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